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| Research article summary (published 30 Mar 2002): |
The psychophysiology of real-time financial risk processing.
Full Abstract
A longstanding controversy in economics and finance is whether financial markets are governed by rational forces or by emotional responses. We study the importance of emotion in the decision-making process of professional securities traders by measuring their physiological characteristics (e.g., skin conductance, blood volume pulse, etc.) during live trading sessions while simultaneously capturing real-time prices from which market events can be detected. In a sample of 10 traders, we find statistically significant differences in mean electrodermal responses during transient market events relative to no-event control periods, and statistically significant mean changes in cardiovascular variables during periods of heightened market volatility relative to normal-volatility control periods. We also observe significant differences in these physiological responses across the 10 traders that may be systematically related to the traders' levels of experience.
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Author information
Author/s: Lo, Andrew W (AW); Repin, Dmitry V (DV);
Affiliation: MIT Sloan School of Management, 50 Memorial Drive, E52-432, Cambridge, MA 02142, USA. alo(-atsign-)mit.edu
Journal and publication information
Publication Type: Journal Article; Research Support, Non-U.S. Gov't
Journal: Journal of cognitive neuroscience (J Cogn Neurosci), published in United States. (Language: eng)
Reference: 2002-Apr; vol 14 (issue 3) : pp 323-39
Dates: Created 2002/04/23; Completed 2002/05/22; Revised 2006/11/15;
PMID: 11970795, status: MEDLINE (last retrieval date: 11/6/2008)
Sourced from the National Library of Medicine. Abstract text and other information may be subject to copyright.
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