On the neural substrates of the disposition effect and return performance
Newton Da Costa ,
Wlademir Prates and
Sergio Da Silva ()
MPRA Paper from University Library of Munich, Germany
We experimentally assess the disposition effect and return performance, using electroencephalogram to measure the brain activity of the participants. The design of the experiment follows a previous protocol (Frydman et al., 2014). Our sample was made up of 12 undergraduates (all male, age range 18 to 29, mean age 22.2) and five professional stock traders (all male, age range 21 to 37, mean age 30.2). We find neural support for the finding that professionals are more likely to escape the disposition effect (Da Costa Jr et al., 2013). We also find higher heart rate variability and brainwave activation are positively related to stock returns. Electrical activity tends to increase with returns, mainly for the beta waves that are activated in conscious states.
Keywords: disposition effect; neurofinance; beta electric brain wave; psychophysiology (search for similar items in EconPapers)
JEL-codes: D87 G02 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-neu
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