Decision Making Under Scarcity: An Inquiry into The Effects of Cognitive Load

Pande, Suvarna (2023) Decision Making Under Scarcity: An Inquiry into The Effects of Cognitive Load. Doctoral thesis, University of East Anglia.

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Scarcity, or the feeling of having less than you need, alters the decision-making process. This poverty-triggered mechanism makes economic decisions more difficult by curtailing cognitive control. This involuntary load redirects the deliberative part of the cognitive system towards making rational choices for scarcity alleviation. At the same time, other preferences get overwhelmingly guided by the affective system. Such recalibration results in the rational-bias split or tunnelling in preferences. Pressed for resources, people become judicious about relevant commitments as other beneficial but irrelevant choices suffer. This sensitivity to ‘what matters’ changes preferences. My work investigates this dichotomy of preferences.

I look at financial scarcity and intimate partner violence as sources of cognitive load and examine split and changes in probability weighting function and risk preferences through the attentional mechanism. I undertook two lab-in-field experiments in Uganda and the Dominican Republic to investigate this framework. To understand the within-subject differences, each participant takes two decisions- one relevant to resolve the scarcity at hand and the other that is not. I use the common consequence ladders to track probability weighting, Eckel Grossman and Holt-Laury price lists for risk preferences.

I confirm the pervasive characteristics of scarcity. Finances are a constant worry for those facing shortages. The level of scarcity affects cognitive load: inhibitory control and attention are taxed by expected scarcity. Working memory scores are affected by unexpected scarcity and the interaction of expected and shock. Additionally, previous experience of economic abuse, higher inhibitory control, and attention risk seeking. Finally, the scarcity-irrelevant probability weighting function is more likely to be non-linear than that for the scarcity-relevant attribute. I show that split or tunnelling depends on the strength of the top-down force of scarcity, the bottom-up force from the choice and their congruence. I find a by-scarcity-relevance split in probability weighting and risk preferences.

Item Type: Thesis (Doctoral)
Faculty \ School: Faculty of Social Sciences > School of Global Development (formerly School of International Development)
Depositing User: Chris White
Date Deposited: 06 Sep 2023 13:11
Last Modified: 06 Sep 2023 13:11


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