scholarly journals The role of the brain in financial decisions: A viewpoint on neuroeconomics

2018 ◽  
pp. 6
Author(s):  
Guillermo Mateu ◽  
Lucas Monzani ◽  
Roger Muñoz Navarro
Keyword(s):  
Decision Making ◽  
Financial Markets ◽  
Brain Activity ◽  
Financial Decisions ◽  
Main Research ◽  
Economic Decisions ◽  
Decision Making Processes ◽  
Financial Decision ◽  
The Brain

In this article, we explain the important role neuroscience plays in economic and financial environments. Hence, we present neuroeconomics as a way to describe how decision-making processes affect brain activity, focusing especially on the importance of economic and financial decisions. We answer some questions regarding the role of emotions in finance, the psychological factors present in financial markets, and how neuropsychological stimuli affect our economic decisions. We conclude by citing the main research in the area of neuroscience in financial decision-making processes, and highlight further research projects in these areas.

scholarly journals Consciousness, decision making, and volition: freedom beyond chance and necessity

2021 ◽  
Author(s):  
Hans Liljenström
Keyword(s):  
Decision Making ◽  
Free Will ◽  
Brain Activity ◽  
Brain Structures ◽  
Complex Process ◽  
Neural Information ◽  
Neural Information Processing ◽  
Stochastic Population Model ◽  
The Brain

AbstractWhat is the role of consciousness in volition and decision-making? Are our actions fully determined by brain activity preceding our decisions to act, or can consciousness instead affect the brain activity leading to action? This has been much debated in philosophy, but also in science since the famous experiments by Libet in the 1980s, where the current most common interpretation is that conscious free will is an illusion. It seems that the brain knows, up to several seconds in advance what “you” decide to do. These studies have, however, been criticized, and alternative interpretations of the experiments can be given, some of which are discussed in this paper. In an attempt to elucidate the processes involved in decision-making (DM), as an essential part of volition, we have developed a computational model of relevant brain structures and their neurodynamics. While DM is a complex process, we have particularly focused on the amygdala and orbitofrontal cortex (OFC) for its emotional, and the lateral prefrontal cortex (LPFC) for its cognitive aspects. In this paper, we present a stochastic population model representing the neural information processing of DM. Simulation results seem to confirm the notion that if decisions have to be made fast, emotional processes and aspects dominate, while rational processes are more time consuming and may result in a delayed decision. Finally, some limitations of current science and computational modeling will be discussed, hinting at a future development of science, where consciousness and free will may add to chance and necessity as explanation for what happens in the world.

scholarly journals Individual Investors' Financial Behaviour and Financial Attitude: Role of Financial Literacy as Moderator in Decision Making

2021 ◽  
Vol VI (I) ◽  
pp. 200-213
Author(s):  
Sadaf Ambreen ◽  
Laiba Khalid ◽  
Aniqa Zubair
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Financial Management ◽  
Individual Investors ◽  
Individual Investor ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Financial Decision ◽  
Financial Management System

As an individual investor, it is incredible to have a successful performance return without financial knowledge. An organization's performance must be measured and analysed based on an adequate financial management system. In today's multifaceted financial scenery Financial Literacy is crucial as it does not only impact financial decisions at the business level but is also important for the country's development. Financial literacy has the importance of the backbone of society. The study adds a new mechanism of financial literacy. The main objective of this study is to determine further insight into the role of financial literacy on an individual's behaviour and attitude towards financial decision making. For analysis, the moderator impact of financial literacy on decision-making data of 100 individual investors has been collected from different banking sectors of Pakistan. The result of this study shows that financial literacy has a significant impact on financial decision making. This study delivers knowledge that can contribute to guiding coming studies, making policies, directors and instructors in their teaching.

A survey on national culture and corporate financial decisions: current status and future research

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali Kutan ◽  
Usama Laique ◽  
Fiza Qureshi ◽  
Ijaz Ur Rehman ◽  
Faisal Shahzad
Keyword(s):  
Decision Making ◽  
National Culture ◽  
Significant Role ◽  
Investment Efficiency ◽  
Content Type ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Extant Literature ◽  
Financial Decision

PurposeThe extant literature provides substantial evidence that various facets of national culture play a significant role in corporate financial decision making. We systematically review the role of national culture on the various thematic domains of corporate financial decision making to outline what have been studies thus far and what needs to be studied.Design/methodology/approachKeywords such as national culture, organizational culture, power distance, uncertainty avoidance, masculinity, risk aversion and individualism for a search in the prominent academic literature databases are used. The studies related to the corporate financial decision making that is tied with these keywords are identified and selected for the systematic review.FindingsThe review of extant literature suggests strong evidence that national culture has a significant role in influencing corporate cash holding, corporate risk-taking, individual behaviour of the financial managers and initial public offering by the corporations. The review also indicates, although extant studies have examined the role of national culture in the key corporate financial decisions, evidence on the role of national culture in the firm's investment efficiency aspects is rather scarce. Also, what explains the role of national culture in corporate financial decision making has not been empirically exploited through causal mechanisms.Practical implicationsThe findings of the studies help advance our understanding of the current research status concerning the role played by the national culture in shaping corporate financial decisions and raise important future calls.Originality/valueTo best of our knowledge, no prior study has systematically reviewed the role of national culture in the thematic domains of corporate financial decision making.

scholarly journals Time Is Money: The Effect of Mode-of-Thought on Financial Decision-Making

2021 ◽  
Vol 12 ◽  
Author(s):  
Lidor Krava ◽  
Shahar Ayal ◽  
Guy Hochman
Keyword(s):  
Decision Making ◽  
Experimental Studies ◽  
Financial Decisions ◽  
Processing Style ◽  
Financial Decision Making ◽  
Economic Decisions ◽  
Financial Decision ◽  
Deliberative Processes ◽  
Modes Of Thought

The dual-system approach holds that deliberative decisions and in-depth evaluation processes lead people to better financial decisions. However, research identifies situations where optimal economic decisions may stem from a more intuitive decision process. In the current work, we present three experimental studies that examined how these two modes-of-thought affect financial decisions. In Study 1, deliberative processes were indeed associated with better one-shot descriptive-based financial decisions. However, Study 2 showed that when participants were asked to make repeated decisions and were required to learn from their experience, the advantage of deliberative over intuitive processes was eliminated. In addition, when participants employed intuitive processes, the quality of their financial decisions improved significantly with experience. Finally, Study 3 showed that the deliberative processing style may lose its advantage when information is not fully available. Overall, these findings suggest that deliberation may contribute to financial decision-making in one-shot decisions. However, when information is lacking, and decisions are repetitive, intuitive processes might be just as good.

The role of mixed emotions in financial decision making

2011 ◽  
Author(s):  
Gergana Y. Nenkov ◽  
Deborah MacInnis ◽  
Maureen Morrin
Keyword(s):  
Decision Making ◽  
Mixed Emotions ◽  
Financial Decision Making ◽  
Financial Decision

scholarly journals Heart and Mind: Essential Components in Sound Decision-Making

2020 ◽  
Vol 4 (Supplement_1) ◽  
pp. 364-364
Author(s):  
Michaela Clark ◽  
Julie Hicks Patrick ◽  
Michaela Reardon
Keyword(s):  
Decision Making ◽  
Decision Quality ◽  
Cluster Solution ◽  
Cognitive Resources ◽  
Cluster Membership ◽  
Essential Components ◽  
Decision Making Processes ◽  
Affective Components ◽  
Heart And Mind

Abstract Consumer tasks permit an ecologically-valid context in which to examine the contributions of affective and cognitive resources to decision-making processes and outcomes. Although previous work shows that cognitive factors are important when individuals make decisions (Patrick et al., 2013; Queen et al.), the role of affective components is less clear. We examine these issues in two studies. Study 1 used data from 1000+ adults to inform a cluster analysis examining affective aspects (importance, meaningfulness) of making different types of decisions. A 4-cluster solution resulted. In Study 2, we used affective cluster membership and cognitive performance as predictors of experimental decision-making outcomes among a subset of participants (N = 60). Results of the regression (F(2, 40) = 6.51, p < .01, R2 = .25.) revealed that both the affective clusters (b = .37, p = .01) and cognitive ability (b = -.30, p = .04) uniquely contributed to the variance explained in decision quality. Age did not uniquely contribute. Results are discussed in the context of developing measures that enable us to move the field forward.

‘My mother thought upper secondary school was OK, but then my sibling said no’ - Young People's Perceptions of the Involvement of Parents and Siblings in their Future Choices

2016 ◽  
Vol 21 (1) ◽  
pp. 65-76 ◽  
Author(s):  
Sanna Aaltonen
Keyword(s):  
Decision Making ◽  
Young People ◽  
Vocational Education ◽  
Future Expectations ◽  
Older Brothers ◽  
Upper Secondary ◽  
Decision Making Processes ◽  
Support Programmes ◽  
People’S Perceptions

This paper seeks to contribute to the research on the role of the family in the educational decision-making of young people by highlighting two overlooked areas of study: vocational education and the role of siblings. It explores young, mainly working-class Finnish 15- to 17-year-olds’ future expectations and decision-making processes concerning the choice between the academic and vocational tracks by drawing on interviews with the young participants of targeted support programmes and their parents. The aim of the paper is to shed light both on how parents try to influence their children's post-school choices and on young people's perceptions of the influence that parents and older brothers and sisters had on their aspirations towards vocational education. The paper demonstrates how horizons for action and educational choices are influenced by family traditions and advice, but that the pieces of advice dispensed by parents and siblings are not necessarily in congruence with each other. The familial suggestions work as a point of reference which is acknowledged and reflected on in the young people's process of mapping and recognising their own preferences. The paper suggests that while the goals of parents and older siblings would not necessarily be upward mobility, but rather to help young people to make a decent choice within a sector corresponding to their own, it is important to acknowledge their influence as a resource valued by many young people.

scholarly journals Impact of financial statements for financial decision-making

2020 ◽  
Vol 5 (2) ◽  
Author(s):  
Saddeq Abdulshakour
Keyword(s):  
Decision Making ◽  
Relative Weight ◽  
Financial Statements ◽  
Decision Makers ◽  
Financial Statement ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Vision 2030 ◽  
Study Population ◽  
Financial Decision

The study aimed to know the effects of analysis of financial statements on financial decisions, and the degree of benefit from them, and to identify what financial statements, what is its importance for the institutions within the framework of the Kingdom's Vision 2030 of ideas and trends, and to identify the contribution of financial statement analysis to financial decision-making. The study was based on the descriptive and analytical approach, and the study population consisted of all financial decision makers. The study was based on a simple random method (70) of financial decision makers. The study was based on the questionnaire and consisted of the following axes (financial statements in companies, financial decision-making, the effects of analysis of financial statements on financial decision-making). The study came out with a number of results, the most important of which are: There is approval by the respondents to all paragraphs of the first axis "financial statements in companies", with a relative weight of 82.8%. There is an agreement by the respondents on all paragraphs of the second axis "making financial decisions in companies", with a relative weight of 81.3%. There is strong approval by the respondents on all paragraphs of the third axis "the effects of analysis of financial statements on financial decision-making", with a relative weight of 86.4%. The financial statements are a key tool to know the financial position of the company, so they must be accurate and reliable before being published by management. The lack of credibility in the financial statements leads to mistrust in the company by investors, and does not give them the possibility to diagnose and make sound decisions. In light of the previous results, the study recommended the following: • Organizing several forums, conferences and forums to clarify the mechanism of preparing the financial statements and how to analyze them, and the need to raise awareness of financial decision makers about the importance of financial statements in the financial decision-making process.

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