scholarly journals Transferring Cognitive Talent Across Domains: The Case of Finance

2021 ◽  
Author(s):  
Kristian Rotaru ◽  
Petko S. Kalev ◽  
Nitin Yadav ◽  
Peter Bossaerts
Keyword(s):  
Theory Of Mind ◽  
Cognitive Bias ◽  
Interpersonal Skills ◽  
Investment Decisions ◽  
Social Contexts ◽  
Disposition Effect ◽  
Personal Investment ◽  
Emotional Dimension ◽  
Intervention Policy ◽  
Cognitive Deficiencies

Abstract We consider Theory of Mind, the ability to correctly predict the intentions of others. The skill requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer Theory of Mind skills, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high Theory of Mind skills. No such transfer is observed in subjects who score well only on the emotional dimension of interpersonal skills. Our findings open up a promising way to exploit cognitive talents in one domain in order to alleviate cognitive deficiencies elsewhere.

scholarly journals Transferring Cognitive Talent Across Domains: The Case of Finance

2021 ◽  
Author(s):  
Kristian Rotaru ◽  
Petko S. Kalev ◽  
Nitin Yadav ◽  
Peter Bossaerts
Keyword(s):  
Theory Of Mind ◽  
Cognitive Bias ◽  
Interpersonal Skills ◽  
Investment Decisions ◽  
Social Contexts ◽  
Disposition Effect ◽  
Personal Investment ◽  
Emotional Dimension ◽  
Intervention Policy ◽  
Cognitive Deficiencies

Abstract We consider Theory of Mind, the ability to correctly predict the intentions of others. The skill requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer Theory of Mind skills, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high Theory of Mind skills. No such transfer is observed in subjects who score well only on the emotional dimension of interpersonal skills. Our findings open up a promising way to exploit cognitive talents in one domain in order to alleviate cognitive deficiencies elsewhere.

scholarly journals Transferring cognitive talent across domains to reduce the disposition effect in investment

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Kristian Rotaru ◽  
Petko S. Kalev ◽  
Nitin Yadav ◽  
Peter Bossaerts
Keyword(s):  
Social Cognitive ◽  
Investment Decisions ◽  
Social Contexts ◽  
Disposition Effect ◽  
Perceptual Dimension ◽  
Cognitive Dimension ◽  
Personal Investment ◽  
The Social ◽  
Intervention Policy ◽  
Cognitive Deficiencies

AbstractWe consider Theory of Mind (ToM), the ability to correctly predict the intentions of others. To an important degree, good ToM function requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer good ToM function, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high scores on the social-cognitive dimension of ToM function. No such transfer is observed in subjects who score well only on the social-perceptual dimension of ToM function. Our findings open up a promising way to exploit cognitive talent in one domain in order to alleviate cognitive deficiencies elsewhere.

Numerical Information Format and Investment Decisions: Implications for the Disposition Effect and the Status Quo Bias

2005 ◽  
Vol 6 (1) ◽  
pp. 19-26 ◽  
Author(s):  
Enrico Rubaltelli ◽  
Sandro Rubichi ◽  
Lucia Savadori ◽  
Marcello Tedeschi ◽  
Riccardo Ferretti
Keyword(s):  
Investment Decisions ◽  
Status Quo ◽  
Disposition Effect ◽  
Status Quo Bias ◽  
Numerical Information ◽  
The Status ◽  
Information Format

scholarly journals EFEK INTERAKSI LITERASI KEUANGAN DALAM KEPUTUSAN INVESTASI: PENGUJIAN BIAS-BIAS PSIKOLOGI

2021 ◽  
Vol 10 (1) ◽  
pp. 36
Author(s):  
Wendy Wendy
Keyword(s):  
Financial Literacy ◽  
Investment Decisions ◽  
Interaction Model ◽  
Investor Behavior ◽  
Disposition Effect ◽  
Herding Behavior ◽  
Risky Investment ◽  
Managerial Implications ◽  
Comprehensive Manner ◽  
Positive Effect

                                                        ABSTRACTThis research aims to analyze psychological biases that occur when investors make risky investment decisions. There are five behavioral factors analyzed (herding, overconfidence, disposition effect, conservatism, and availability). Financial literacy is used as moderator in analyzing the effect of those bahaviors towards risky investment decisions. This research examines four econometric equations in explaining financial literacy as a moderator. Interaction effect testing is carried out using moderating variable regression. The results show that psychological biases occur in making risky investment decisions. Herding behavior, overconfidence, disposition effect, and conservatism show a positive effect, while availability does not show a significant effect. Testing on the interaction model finds that financial literacy is able to reduce these psychological biases. This finding also explains the managerial implications that investors with high levels of financial literacy have the potential to experience relatively low psychological biases compared to investors with limited levels of financial literacy. In terms of limitations, this research uses a questionnaire survey that has not been able to reveal aspects of investor behavior in a comprehensive manner. In addition, the number of respondents who are more dominated by beginner investors also adds to the limitations in carrying out the generalization.                                                    ABSTRAKRiset ini bertujuan untuk menganalisis bias-bias psikologi yang terjadi ketika pemodal mengambil keputusan investasi berisiko. Terdapat lima faktor perilaku yang dianalisis, yaitu perilaku herding, overconfidence, disposition effect, conservatism, dan availability. Literasi keuangan digunakan sebagai pemoderasi dalam menganalisis pengaruh faktor-faktor keperilakuan tersebut terhadap keputusan investasi berisiko. Riset ini menguji empat persamaan ekonometrika dalam menjelaskan peran literasi keuangan sebagai pemoderasi. Pengujian efek interaksi dilakukan dengan menggunakan regresi variabel moderasi. Hasil analisis menunjukkan bahwa bias-bias psikologi terjadi dalam pengambilan keputusan investasi berisiko. Perilaku herding, overconfidence, disposition effect, dan conservatism menunjukkan pengaruh positif terhadap pengambilan keputusan investasi berisiko, sementara bias availability tidak menunjukkan pengaruh yang bermakna dalam riset ini. Pengujian pada model interaksi menemukan bahwa literasi keuangan mampu mereduksi bias-bias psikologi tersebut. Temuan ini sekaligus menjelaskan implikasi manajerial bahwa pemodal dengan tingkat literasi keuangan yang baik berpotensi mengalami bias-bias psikologi yang relatif lebih rendah dibandingkan pemodal dengan tingkat lietrasi keuangan yang terbatas. Dari sisi keterbatasan, riset ini menggunakan survei kuesioner yang belum mampu mengungkap aspek perilaku pemodal secara komprehensif. Selain itu, jumlah responden yang lebih didominasi oleh pemodal pemula juga menambah keterbatasan dalam melakukan generalisasi hasil penelitian.

scholarly journals Theory of Mind network activity is associated with metaethical judgment: An item analysis

2017 ◽  
Author(s):  
Jordan E. Theriault ◽  
Adam Waytz ◽  
Larisa Heiphetz ◽  
Liane Young
Keyword(s):  
Theory Of Mind ◽  
Item Analysis ◽  
Positive Association ◽  
Brain Regions ◽  
Social Contexts ◽  
Network Activity ◽  
Predictive Processing ◽  
Temporoparietal Junction ◽  
Social Tasks ◽  
Stimulus Features

The theory of mind network (ToMN) is a set of brain regions activated by a variety of social tasks. Recent work has proposed that these associations with ToMN activity may relate to a common underlying computation: processing prediction error in social contexts. The present work presents evidence consistent with this hypothesis, using a fine-grained item analysis to examine the relationship between ToMN activity and variance in stimulus features. We used an existing dataset (consisting of statements about morals, facts, and preferences) to explore variability in ToMN activity elicited by moral statements, using metaethical judgments (i.e. judgments of how fact-like/preference-like morals are) as a proxy for their predictability/support by social consensus. Study 1 validated expected patterns of behavioral judgments in our stimuli set, and Study 2 associated by-stimulus estimates of metaethical judgment with ToMN activity, showing that ToMN activity was negatively associated with objective morals and positively associated with subjective morals. Whole brain analyses indicated that these associations were strongest in bilateral temporoparietal junction (TPJ). We also observed additional by-stimulus associations with ToMN, including positive associations with the presence of a person (across morals, facts, and preferences), a negative association with agreement (among morals only), and a positive association with mental inference (in preferences only, across 3 independent measures and behavioral samples). We discuss these findings in the context of recent predictive processing models, and highlight how predictive models may facilitate new perspectives on metaethics, the centrality of morality to personal identity, and distinctions between social domains (e.g. morals vs. preferences).

scholarly journals Millionaires Speak: What Drives Their Personal Investment Decisions?

2021 ◽  
Author(s):  
Svetlana Bender ◽  
James J. Choi ◽  
Danielle Dyson ◽  
Adriana Z. Robertson
Keyword(s):  
Investment Decisions ◽  
Personal Investment

scholarly journals Millionaires Speak: What Drives Their Personal Investment Decisions?

2020 ◽  
Author(s):  
Svetlana Bender ◽  
James Choi ◽  
Danielle Dyson ◽  
Adriana Robertson
Keyword(s):  
Investment Decisions ◽  
Personal Investment

Investment behaviour of women entrepreneurs

2020 ◽  
Vol 12 (4) ◽  
pp. 485-504
Author(s):  
Jyoti M. Kappal ◽  
Shailesh Rastogi
Keyword(s):  
Women Entrepreneurs ◽  
Service Providers ◽  
Investment Decision ◽  
Investment Decisions ◽  
Risk Behaviour ◽  
Content Type ◽  
Investment Decision Making ◽  
Personal Investment ◽  
Investment Manager ◽  
Investment Behaviour

Purpose The purpose of this paper is to understand the new kind of investors – women entrepreneurs – and to find out the factors that drive their investment behaviour and investment decisions. Design/methodology/approach The approach of qualitative enquiry was used for the research in which 18 in-depth exploratory interviews were conducted to identify the determinants of the investment behaviour shown by women entrepreneurs, a growing segment in investment. The accumulated data was analysed using open coding. Findings The research show that women entrepreneurs consider investment as a long-term instrument are risk averse and quite conservative. They are willing to take risks in business but not for making investment decisions. The reasons for this low-risk behaviour include lack of time to understand investments and lack of knowledge about various products. The research asserts that if they spend time to be informed about the nuances of investment instruments, they are likely to take risks for their investments as well. The interviews also reflect that women entrepreneurs often mimic the investment behaviour of their parents. Research limitations/implications The sample for this research was taken from only two cities in India and a broader research in other cities as well will expand the understanding of investment behaviours demonstrated by women entrepreneurs. The differences in women entrepreneurs’ investment behaviour due to culture and ethnicity of the respondent are also not considered. Practical implications The outcomes of the research will help the investment manager to get a better insight into the psychology of women entrepreneurs as investors. This will help them develop personalized and relevant portfolio recommendations. Second, the findings will help service providers to develop training modules for their investment advisors by sensitizing them to needs and wants of women entrepreneurs as potential investors. Third, the research will be of interest for policymakers and researchers to understand the determinants of personal investment decision-making amongst women entrepreneurs. Finally, it will help women entrepreneurs understand and mitigate their biases while taking investment decisions. It will lead them to take wiser investment decisions, thereby reducing the risk and maximizing opportunities of returns. Social implications The research will provide opportunities for enhancing gender equality amongst investors. This can be achieved by educating the investment advisors on the traits and preferences of women entrepreneurs as investors. Designing and delivering specific workshops on investment awareness for women entrepreneurs can also be accomplished based on the findings of this research. Originality/value To the researcher’s best knowledge, the investment behaviour of women entrepreneurs in India has been little investigated. This study appears to be the first qualitative research attempt in that direction. This paper will be useful in understanding the behavioural biases by women entrepreneurs in considering their personal investment decisions.

scholarly journals THE EFFECT OF SALIENCE AND DISPOSITION EFFECT ON STOCK INVESTMENT DECISIONS ON INVESTORS IN SURABAYA

2021 ◽  
Vol 1 (2) ◽  
pp. 77-84
Author(s):  
Jessica Ratna Subandi ◽  
Sautma Ronni Basana
Keyword(s):  
Data Collection ◽  
Significant Influence ◽  
Quantitative Research ◽  
Investment Decisions ◽  
Data Sources ◽  
Primary Data ◽  
Disposition Effect ◽  
Stock Investment ◽  
Data Collection Technique ◽  
The Relationship

This study aims to prove the effect of salience and disposition on investors' investment decisions in Surabaya. In addition, this study also seeks to see the effect of salience and disposition effect on investment decisions with the type of investor as a moderating variable. This type of research is quantitative research with associative methods and primary data sources. The data collection technique used a questionnaire. The data that has been collected is then processed using Partial Least Squares (PLS). The results showed that the salience and disposition effect had a significant influence on investment decisions. In addition, the types of investors weaken the relationship between the salience and disposition effect on investment decisions.

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