Risky choices and emotion-based learning

Caterina Lucarelli, Pierpaolo Uberti, Gianni Brighetti and Mario Maggi

Journal of Economic Psychology, 2015, vol. 49, issue C, 59-73

Abstract: The paper offers a comprehensive analysis of causes and consequences of the accumulation of emotional experience, measured via skin conductance response, when taking risky choices. A large experimental data set was obtained from a psycho-physiological task conducted with 645 bank customers and financial professionals. With respect to causes, we found that the individual emotional response to gains/losses is trend-dependent and influenced by habituation, as well as by anchoring/framing due to the external layout of risky alternatives. With respect to consequences, we found evidence that the somatic reinforcement experience is able to guide asset picking, but within a long-term strategy. Consequently, selection behaviors were observed in a portfolio mean–variance framework, revealing that somatic markers lead individuals to pursue a long-term ‘psycho-economic’ efficiency that integrates factual information (monetary outcomes) with the implicit subjective experience.

Keywords: Decision-making; Emotion-based learning; Asset selection; Portfolio choices; Neuroeconomics (search for similar items in EconPapers)
JEL-codes: C52 D87 G11 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:49:y:2015:i:c:p:59-73

DOI: 10.1016/j.joep.2015.04.004

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