How anxiety impacts the economic decision-making: insights from neuroscience and cognitive psychology

Shan Huang

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Anxiety is a mental disorder that not only impacts the physical and mental well-being of individuals but also affects cognitive functions, including decision-making processes. Does anxiety, as a trait instead of a state, disrupt the normal decision-making process? This paper explores the impact of anxiety as a trait on the normative decision-making framework, focusing specifically on economic choices that necessitate a balance between potential losses and gains. A review and discussion of how anxiety affects decision-making will be discussed in detail from cognitive psychology and neuroscience perspective. The first section examines key cognitive differences between anxious and non-anxious individuals, highlighting cognitive biases that hinder decision-making in those with anxiety. Subsequently, we analyze the neural mechanisms underlying these processes, emphasizing the roles of critical brain regions such as the amygdala and prefrontal cortex, along with relevant functional connectivity, to elucidate how cognitive biases affect individuals with anxiety during economic decision-making. Lastly, the practical implication of the paper will be discussed.

Keywords: anxiety; cognitive bias; economic decision making; neuroeconomics; decision neuroscience (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2025-05-15
New Economics Papers: this item is included in nep-neu
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Published in Lecture Notes in Education Psychology and Public Media, 15, May, 2025, 91(1). ISSN: 2753-7048

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:128222

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