Is cognitive impairment related to violations of rationality? A laboratory alcohol intoxication study testing transitivity of preference.

Alcohol intoxication is well known to impair a number of cognitive abilities required for sound decision making. We tested whether an intoxicating dose of alcohol altered whether individuals satisfied a basic property of rational decision making, transitivity of preference. Our study was within-subjects in design and our analysis teased apart stable, yet error-prone, preferences from variable, error-free preferences. We find that alcohol intoxication does not appear to play a major role in determining whether subjects violate transitivity. For a minority of individuals, we find that alcohol intoxication does impact how they select among and/or perceive lotteries with similar attribute values. This, in turn, can cause them to alter various aspects of their preference structure.