Improving risky choices: The effect of cognitive offloading on risky decisions
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Date
2025-04-01
Source Title
Journal of Risk and Uncertainty
Publisher
Springer Science and Business Media LLC
Melbourne Authors
Affiliation
Finance
Document Type
Journal Article
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Gao, Y. & Garagnani, M. (2025). Improving risky choices: The effect of cognitive offloading on risky decisions. Journal of Risk and Uncertainty, 70 (2), pp.105-128. https://doi.org/10.1007/s11166-025-09451-z.
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Abstract
Economic choices are difficult and computationally complex. To make good decisions one needs to integrate different variables and resolve several trade-offs. We study whether providing external tools which help reducing the computational complexity of choices improves risky decisions. We find mixed evidence for the effectiveness of these tools, as people tend to rarely use them. Overall, cognitive offloading tools make people less risk averse and better at updating beliefs, but they do not decrease irrational behavior, in the sense of the proportion of dominated choices, violations of expected utility, and sub-optimal budget allocations. These results suggest that simply providing external tools, which make choices (computationally) easier, but where using these aids is discretional, has a limited impact on improving people’s choices under risk.