Moderate Stress Improves Risky Decisions

Many decisions involving risk are made under stress. Yet, stress has been shown to both increase and decrease risk-taking. We propose another way to evaluate repeated decisions involving risk: decision consistency. An experiment was run subjecting participants to the cold-pressor test to induce variations in physiologic arousal that was quantified by electrodermal activity. The analysis demonstrated that moderate arousal of ~2mS above the average basal skin conductance level improved the consistency of decisions involving risk. Conversely, low arousal and high arousal reduced decision consistency. Estimating a Bayesian mediation model, we showed that high arousal impairs decision consistency both directly and by increasing negative affect. Our findings demonstrate the importance of physiologic arousal to focus attentional, cognitive, and affective systems in order to make consistent decisions involving risk.