Human brain and financial behavior: a neurofinance perspective

Mrinalini Srivastava, Gagan Sharma () and Achal Kumar Srivastava

International Journal of Ethics and Systems, 2019, vol. 35, issue 4, 485-503

Abstract: Purpose - This study aims to review the relationship between neurological processes and financial behavior from an interdisciplinary perspective. Individual decision-making is influenced by cognitive and affective biases; hence, it becomes pertinent to understand the origin of these biases. Neurofinance is an emerging field of finance budding from neuroeconomics and explains the relationship between human brain activity and financial behavior, drawn from interdisciplinary fields, including neurology, psychology and finance. Design/methodology/approach - This conceptual paper extensively reviews the extant literature and performs meta-analysis to attain its research objectives. Findings - The paper highlights the use of neuroimaging techniques in mapping the brain areas to help understand the processes in the higher cognitive areas of brain. The paper raises some new questions regarding individual preferences and choices while making financial or non-financial decisions. Originality/value - The special focus on dysfunctions arising in brain because of injury and their impact on decision-making is also a key point in this paper and is summarized using meta-analytic forest plot. The existing literature provides instances where emotional processing is altered by injury in brain and may lead to more advantageous decisions, especially in risky situations.

Keywords: Decision-making; Neuroeconomics (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoesp:ijoes-02-2019-0036

DOI: 10.1108/IJOES-02-2019-0036

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