What Decision Neuroscience Teaches Us About Financial Decision Making

Peter Bossaerts ()
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Peter Bossaerts: Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, California 91125; Ecole Polytechnique Fédérale, CH-1015 Lausanne, Switzerland

Annual Review of Financial Economics, 2009, vol. 1, issue 1, 383-404

Abstract: Financial decision making is the outcome of complex neurophysiological processes involving, among others, constant re-evaluation of the statistics of the problem at hand, balancing of the various emotional aspects, and computation of the very value signals that are at the core of modern economic thinking. The evidence suggests that emotions play a crucial supporting role in the mathematical computations needed for reasoned choice, rather than interfering with it, even if emotions (and their mathematical counterparts) may not always be balanced appropriately. Decision neuroscience can be expected in the near future to provide a number of effective tools for improved financial decision making.

Keywords: neuroeconomics; experimental finance; risk; emotions (search for similar items in EconPapers)
JEL-codes: D87 G11 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (27)

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