LAUSR

Making decisions over extended periods of time is cognitively taxing and can lead to decision fatigue, which is linked to a preference for the ‘default’ option, namely whatever decision involves relatively little cognitive effort. Such effects have been demonstrated across a number of applied settings, including forensic and clinical contexts. Previous research, however, has not quantified the cost of such suboptimal decisions. We assessed the magnitude of the negative consequences of decision fatigue in the finance sector. Using 26 501 credit loan applications evaluated by credit officers of a major bank, we show that in this real-life financial risk-taking context credit loan approvals across the course of a day decreased during midday compared with early or later in the workday, reflecting a preference for the default option. To quantify the economic loss associated with such decision variability, we then modelled the bank's additional credit collection if all decisions had been made during early morning levels of approval. This would have resulted in $509 023 extra revenue for the bank, for one month. Thus, we provide further evidence that is consistent with a pattern of decision fatigue, and that it can have a substantial negative impact in the finance sector that warrants considerations to counteract it.