Debiasing the Disposition Effect with Noninvasive Brain Stimulation: The Role of Cognitive Control

Xiaofei Niu (), Jianbiao Li (), Dahui Li () and Qian Cao ()
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Xiaofei Niu: School of Economics/Institute for Study of Brain-like Economics, Shandong University, Jinan 250100, China
Jianbiao Li: School of Economics/Institute for Study of Brain-like Economics, Shandong University, Jinan 250100, China
Dahui Li: Labovitz School of Business and Economics, University of Minnesota Duluth, Duluth, Minnesota 55812
Qian Cao: School of Business Administration, Nanjing University of Finance & Economics, Nanjing 210023, China

Management Science, 2023, vol. 69, issue 10, 6293-6312

Abstract: This study tests whether modulating a brain region associated with cognitive control using noninvasive brain stimulation affects the disposition effect. A participant trades stocks in an experimental asset market while their level of cognitive control is exogenously manipulated by applying weak current stimulation to a control-related cortical region. We find that the stimulation significantly affects the participant’s cognitive control and tendency to exhibit the disposition effect. This result is also obtained for financial professionals. We thus provide evidence that cognitive control is important for the disposition effect.

Keywords: behavioral bias; disposition effect; cognitive control; tDCS (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:10:p:6293-6312

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