Emotional engagement of traders and investors

What is the role of emotions in financial decisions?


Using controlled laboratory experiments, we investigate the endogenous relation between participants' trading activity, market prices, the bid-ask spread, and changes in emotional responses, specifically heart rate variability (HRV) and skin conductance response (SCR). We have discovered a fascinating link between emotional engagement and performance. This link confirms findings, first discovered in neuroscience, that emotions are an integral part of reasoned decision-making.


Peter Bossaerts, Kristian Rotaru

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