Who Leads the Trade? Responsibility, Algorithmic Influence, and Regret in Financial Human‑Algorithm Collaboration

Anna Kovalchuk

No 46zxq_v1, SocArXiv from Center for Open Science

Abstract: As financial decision‐making increasingly shifts toward algorithmic co‐pilot models, the psychological dynamics of human–algorithm collaboration remain insufficiently understood. This study examines defensive attribution mechanisms in financial trading, focusing on how individuals assign responsibility and experience regret under varying outcomes. A custom‐built trading simulator was used (N = 88; 1,320 incentivized trials), and behavior was analyzed using linear mixed‐effects models. The results reveal a robust self‐serving bias expressed through two distinct processes. Responsibility attribution was high for gains but declined sharply after losses, while perceived algorithm influence increased following failures, indicating retrospective inflation of the algorithm’s role. Regret exhibited a structural asymmetry: loss‐related regret was strongly dispositional, whereas gain‐related regret was situational. These patterns suggest that negative outcomes activate stable self‐evaluative tendencies, while positive outcomes elicit more context‐dependent responses. Crucially, restoring decision autonomy significantly reduced emotional distress after losses. Participants who chose to ignore the algorithm experienced lower regret, indicating that agency serves as a psychological buffer that protects self‐image more effectively than compliance with external advice. The findings imply that financial interfaces should avoid full automation and instead prioritize meaningful user engagement to preserve psychological ownership of decisions.

Date: 2026-02-20
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://osf.io/download/6998683441fedfa48f7afc0e/

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:46zxq_v1

DOI: 10.31219/osf.io/46zxq_v1

Access Statistics for this paper

More papers in SocArXiv from Center for Open Science
Bibliographic data for series maintained by OSF ().