Should Einstein Manage Your Money? Lay Theories and Normative Force of the Relation Between Cognitive Ability and Preferences

Shane Frederick, Yale University, USA
Nathan Fong, Sloan School of Management, USA
Eric Tsytsylin, Yale School of Management, USA
Recent research has found that smarter people are more patient and less risk averse. Here we examine whether these facts are widely known, and whether being informed of them influences decisions. We find that respondents predict this relationship for time preferences, and, that, correspondingly, emphasizing it does not make them more patient. In contrast, respondents do not predict the relation between cognitive ability and risk preferences, and informing subjects of the relation substantially increases their risk tolerance.
[ to cite ]:
Shane Frederick, Nathan Fong, and Eric Tsytsylin (2010) ,"Should Einstein Manage Your Money? Lay Theories and Normative Force of the Relation Between Cognitive Ability and Preferences", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 111-114 .