Neurofinance

Miendlarzewska, Ewa A.; Kometer, Michael; Preuschoff, Kerstin

doi:10.1177/1094428117730891

Cited by 29 publications

(33 citation statements)

References 172 publications

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“…It also makes sense that the effect was observed for Time 1 but not for Time 2 as unpredictability was removed, which is in line with the general understanding of the dopaminergic system being related to both motivation and learning [ 57 ]. The results from the current study can inform policy makers on how individual decision making translates at an aggregate level such as financial markets [ 58 , 59 , 60 ].…”

Section: Discussionmentioning

confidence: 99%

Left Frontal EEG Power Responds to Stock Price Changes in a Simulated Asset Bubble Market

Toma¹,

Miyakoshi

2021

Brain Sciences

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Financial bubbles are a result of aggregate irrational behavior and cannot be explained by standard economic pricing theory. Research in neuroeconomics can improve our understanding of their causes. We conducted an experiment in which 28 healthy subjects traded in a simulated market bubble, while scalp EEG was recorded using a low-cost, BCI-friendly desktop device with 14 electrodes. Independent component (IC) analysis was performed to decompose brain signals and the obtained scalp topography was used to cluster the ICs. We computed single-trial time-frequency power relative to the onset of stock price display and estimated the correlation between EEG power and stock price across trials using a general linear model. We found that delta band (1–4 Hz) EEG power within the left frontal region negatively correlated with the trial-by-trial stock prices including the financial bubble. We interpreted the result as stimulus-preceding negativity (SPN) occurring as a dis-inhibition of the resting state network. We conclude that the combination between the desktop-BCI-friendly EEG, the simulated financial bubble and advanced signal processing and statistical approaches could successfully identify the neural correlate of the financial bubble. We add to the neuroeconomics literature a complementary EEG neurometric as a bubble predictor, which can further be explored in future decision-making experiments.

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Section: Discussionmentioning

confidence: 99%

Left Frontal EEG Power Responds to Stock Price Changes in a Simulated Asset Bubble Market

Toma¹,

Miyakoshi

2021

Brain Sciences

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“…Several studies have associated activation between risk and ambiguity with distinct brain areas. Usually, risk activates the insula, the striatum and the parietal cortex, whereas ambiguity involves the lPFC, the mPFC, the cingulate cortex and the amygdala [ 13 ].…”

Section: Introductionmentioning

confidence: 99%

An ALE Meta-Analysis on Investment Decision-Making

2021

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It is claimed that investment decision-making should rely on rational analyses based on facts and not emotions. However, trying to make money out of market forecasts can trigger all types of emotional responses. As the question on how investors decide remains controversial, we carried out an activation likelihood estimation (ALE) meta-analysis using functional magnetic resonance imaging (fMRI) studies that have reported whole-brain analyses on subjects performing an investment task. We identified the ventral striatum, anterior insula, amygdala and anterior cingulate cortex as being involved in this decision-making process. These regions are limbic-related structures which respond to reward, risk and emotional conflict. Our findings support the notion that investment choices are emotional decisions that take into account market information, individual preferences and beliefs.

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“…Previous literature has detected several individual-level factors which affect households' financial behaviour such as investor-advisor similarity in personality traits (Zubair Tauni et al 2020), the feeling of being competent (Graham et al 2009), psychological factors as locus of control, copying styles (McNair et al 2016), self-control, optimism, and deliberative thinking (Strömbäck et al 2017), and financial literacy and financial numeracy (Almenberg and Dreber 2015;Lusardi and Mitchell 2008). Recently, neurofinance, applying different neuroscientific methodologies in order to investigate subjects' brain and neurophysiological mechanisms which drive decision outcomes, has started to underpin the need to unravel the biological basis of the individual differences, paying special attention to gender-related variability in financial behaviour (Miendlarzewska et al 2017). The economics, psychology, and sociology literature have largely documented the existence of a gender gap in financial participation and decision-making, highlighting that males are more often primary decision-makers when dealing with savings and investment decisions (Boggio et al 2020).…”

Section: Introductionmentioning

confidence: 99%

Gender-Related Variability in Information Processing of Disclosure Documents

et al. 2021

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Disclosure is used worldwide as a tool to increase transparency and help investors to make their decisions, thus partially overcoming asymmetric information in financial markets. This research seeks to explore gender-related variability in visual attention allocation to the Key Investor Information Document, and in the evaluation of product financial attractiveness. The study exploits the eye-tracking methodology to collect neural data, responding to the call for considering new data sources. The analysis shows that men tend to dedicate more attention to the sections Objectives and Past performance while women spend more time to scan the sections Risk-reward profile and Costs and charges; When evaluating product financial attractiveness, women tend to evaluate them as poorly financially attractive more often than men. Results reveal the existence of gender-related variability in the visual search strategy for relevant information, which, in turn, can impact on the phase of product evaluation. These findings highlight the professional responsibility of regulators and supervisors to monitor sellers and marketers’ behaviours when they interact with consumers. Moreover, this study could provide support to develop financial disclosure documents considering individual differences and ensuring that adequate attention is allocated by investors to all financial information sources, thus raising the level of investor protection. Eventually, the study stimulates innovations to be embedded in the world-wide ongoing regulatory developments that aim at increasing transparency requirements.

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Neurofinance

Cited by 29 publications

References 172 publications

Left Frontal EEG Power Responds to Stock Price Changes in a Simulated Asset Bubble Market

Left Frontal EEG Power Responds to Stock Price Changes in a Simulated Asset Bubble Market

An ALE Meta-Analysis on Investment Decision-Making

Gender-Related Variability in Information Processing of Disclosure Documents

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