The conflict negativity: A neural correlate of value conflict and indecision during financial decision making

Individuals struggle when making financial decisions, sometimes preferring to avoid difficult decisions and receive lower future rewards over actively deliberating between options of similar value. Here, we examine how conflict deriving from objective and subjective value characteristics of stocks, as well as the behavioural and phenomenological correlates of decision conflict, are accompanied by variation in a thus far understudied ERP component, the conflict negativity (CN). In a novel EEG paradigm (N = 53), we simulated a financial decision situation in which participants made incentivized choices between different, sometimes conflicting, stock options. Our results indicate that participants become slower, more undecided, and less pleased, when choosing between similar options compared to choices in which one option clearly outweighs the other. This effect even held when participants chose between two objectively good alternatives. We further provide preliminary evidence that the CN, a negative-going ERP recorded over the medial prefrontal cortex, is not only sensitive to decision conflict, but also predicts behavioural indecision. What is more, subjective value characteristics of stocks, impressions based on brand perception of the stock options, modestly influenced affective and behavioural reactions over and above objective stock characteristics. While our results are at odds with assumptions made by classic economic theory, they may serve as one out of several indicators as to why private investors seem to avoid financial decisions.

The conflict negativity: Neural correlate of value conflict and indecision during financial decision making

Individuals struggle when making financial decisions, sometimes preferring lower future rewards over actively making decisions at all. Here, we examine how conflict deriving from objective and subjective value characteristics of stocks, as well as the behavioural and phenomenological correlates of decision conflict, are accompanied by variation in a thus far understudied ERP component, the conflict negativity (CN). In a novel EEG paradigm (N = 53), we simulated a financial decision situation in which participants made incentivized choices between different, sometimes conflicting, stock options. Our results indicate that participants take longer, are more undecided and less pleased, when choosing between conflicting options compared to choices where one option is obviously better than the alternative—even when choosing between two objectively good alternatives. We further provide preliminary evidence that the CN, a negative-going ERP recorded over the medial prefrontal cortex, not only reacts to conflict decisions but also predicts participants’ behavioural indecision during choice. What is more, subjective value characteristics of stocks, impressions based on brand perception of the stock options, influenced affective and behavioral reactions over and above objective stock characteristics. While our results are at odds with assumptions made by classic economic theory, they can be applied to real world observations on private investor behaviour.

The challenge of plural identity

The complexity of collective existence is expressed through an awareness of its real identity, which then entails an appropriate attitude towards its own negativity. Within the hierarchically structured identity, different levels of its generality make it possible to consider them as factors of a plural reality. If negativity is raised to consciousness, then its dark side is dismantled. Thus, instead of being a factor of conflict, negativity becomes an element of complementariness and a factor in the construction of a shared identity at a higher level of generality.