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How does sleep deprivation affect financial decision-making?

The one place we really should try to make sure we have a good night’s sleep before we make any decisions is Las Vegas, or any casino, for that matter. A new study suggests that beyond leading to poor decision making, sleep deprivation actually makes us more optimistic in our judgments, particularly those about money. Researchers at Duke University studied healthy volunteers as they underwent functional magnetic resonance imaging (fMRI) and found that the less we sleep, the more likely we are to focus on potential gains and ignore potential risks.

It isn’t that we’re just too tired to make the right choice; sleep deprivation actually changes the way that our brains process information. Lack of sleep makes us:

  • More sensitive to positive outcomes
  • More likely to pay attention to the upside
  • Less aware of possible negative outcomes, making it easy to ignore the possibility of losing
This could be why when people stay up all night playing cards and gambling they take crazy risks that they shouldn’t and maybe wouldn’t take if they were well rested! This could also hold true for people staying up all night on online gaming sites: the later you stay up, the more focused you become on the possibility of winning big (and less focused on the possibility of losing big). It also explains why casinos often have flashing lights, free alcohol, and late hours: they are all designed to make you stay longer and as you become more and more sleep deprived, make bigger and riskier gambles.

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.