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Brain Activity of the Investor's Stock Market Financial Decision

Author

Listed:
  • João Paulo Vieito
  • Armando Freitas da Rocha
  • Fabio Theoto Rocha

Abstract

Using electroencephalogram technologies (EEG) to map the brain, this investigation is among the first to analyze if the same brain circuits are used when making buying, selling, or holding stock decisions and if different circuits are used when market conditions change such as in a growing market or a high volatility market. Two groups of 20 volunteers were used. One group initiated the trading process in a market with steadily increasing prices and then moved to a high volatility market, and the second group started trading in a high volatility market and then in a growing market.Results are quite innovative in the area of finance: brain mapping associated with such decisions differs between these two groups, and also when buying, selling, or holding decisions were made. These results clearly demonstrate that people may use different reasoning strategies to make financial decisions depending on their trading experience.

Suggested Citation

  • João Paulo Vieito & Armando Freitas da Rocha & Fabio Theoto Rocha, 2015. "Brain Activity of the Investor's Stock Market Financial Decision," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 16(3), pages 220-230, July.
    • Handle: RePEc:taf:hbhfxx:v:16:y:2015:i:3:p:220-230
    DOI: 10.1080/15427560.2015.1064931
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    Cited by:

    1. AsleBagh, Pegah & Bonyadi Naeini, Ali & Moeeni, MohammadReza, 2024. "Investigating the effect of three different factors including experience, personality and color on the decision-making process in stock markets using EEG," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 109(C).
    2. Li, Jianbiao & Niu, Xiaofei & Li, Dahui & Cao, Qian, 2018. "Using Non-Invasive Brain Stimulation to Test the Role of Self-Control in Investor Behavior," EconStor Preprints 177890, ZBW - Leibniz Information Centre for Economics.

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