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NEUROFINANCE - ANALYZING AND UNDERSTANDING STOCK TRADER’S DECISION-MAKING PROCESS BASED ON REAL-TIME MONITORING OF EMOTIONAL REACTIONS
Resource type
Authors/contributors
- Hsu, Hsin-Tzu (Author)
- Marques, João Alexandre Lobo (Contributor)
- University of Saint Joseph (Contributor)
Title
NEUROFINANCE - ANALYZING AND UNDERSTANDING STOCK TRADER’S DECISION-MAKING PROCESS BASED ON REAL-TIME MONITORING OF EMOTIONAL REACTIONS
Abstract
Human emotions can be meticulously associated with decision-making, and emotion can generate behaviours. Due to the fact that it could be bias and exhaustively complex to examine how human beings make choices, important groups of study in finance are stock traders and non-traders. The objective of this work is to analyze the connection between emotions and the decision-making process of investors and non-investors to understand how emotional arousal might dictate the process of deciding policy. As facial expressions are fleeting, neuroscience tools such as AFFDEX (Real-Time Facial Expression Analysis), Eye-Tracking, and GSR (galvanic skin response) were adopted to facilitate the experiment and its accompanying analysis process. Thirty-seven participants attended the study, ranging from 18 to 72 years old; the distribution of investors and non-investors was twenty-four and thirteen, respectively. The experiment initially disclosed a thought-provoking result between the two groups under the certainty and risk-seeking prospect theory; there were more risk-takers among non-investors at 75%, while investors were inclined toward certainty at 79.17%. The implication could be that the non-investing individuals were less complex in thought and therefore pursued higher returns besides a high probability of losing the game. In addition, the automatic emotion classification system indicates that when non-investors confronted a stock trending chart beyond their acquaintance or knowledge, they were psychologically exposed to fear, anger, sadness, and surprise. Investors, on the contrary, were detected with disgust, joy, contempt, engagement, sadness, and surprise, where sadness and surprise overlapped in both parties. Under time pressure conditions, 54.05% of investors or non-investors tend to make decisions after the peak(s) of emotional arousal. Variations were found in the deciding points of the slopes: 2.70% were decided right after the peak(s), 37.84% waited until the emotions turned stable, and 13.51% were determined as the emotional indicators started to slide downwards. Several combinations of emotional responses were associated with decisions. For example, negative emotions could induce passive decision-making, in this case, to sell the stock; nevertheless, it was also examined that as the slope slipped downwards to a particular horizontal point, the individuals became more optimistic and selected the "BUY" option. The support of physiological monitoring tools makes it possible to capture the individuals' responses and discover the science of decision-making. Future works may consider expanding the study to more significant demographic populations for further discoveries
University
University of Saint Joseph
Place
Macau
Date
2023
# of Pages
83
Language
eng
Library Catalog
Library Catalog (Koha)
Call Number
M-BA 2023 HSU,HSI
Notes
Supervisor : João Alexandre Lobo MarquesIn Partial Fulfillment of the Requirements for the Degree of Master in Business Administration in the Faculty of Business and Law, University of Saint Joseph, Macau, May/2023
Citation
Hsu, H.-T. (2023). NEUROFINANCE - ANALYZING AND UNDERSTANDING STOCK TRADER’S DECISION-MAKING PROCESS BASED ON REAL-TIME MONITORING OF EMOTIONAL REACTIONS [University of Saint Joseph]. https://library-opac.usj.edu.mo/cgi-bin/koha/opac-detail.pl?biblionumber=212120
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