Details
| Original language | English |
|---|---|
| Article number | 106711 |
| Journal | Journal of Banking and Finance |
| Volume | 154 |
| Early online date | 8 Nov 2022 |
| Publication status | Published - Sept 2023 |
Abstract
We explore in a series of incentivized experiments how stock market developments affect emotional arousal (proxied by pupil dilation, electrodermal activity, and heart rate variation), and how this emotional arousal affects investment behavior. Experiencing stock market downswings increases emotional arousal, while upswings do not trigger such an effect. The subsequent interplay between emotional arousal and investment behavior is by no means one-dimensional. The heightened level of emotional arousal after downswings reduces financial risk taking and thus the money put at stake, while the exposure to financial risks itself increases subsequent emotional arousal.
Keywords
- Emotional arousal, Investment behavior, Visualizations
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Finance
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of Banking and Finance, Vol. 154, 106711, 09.2023.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Dynamics of stock market developments, financial behavior, and emotions
AU - Cordes, Henning
AU - Nolte, Sven
AU - Schneider, Judith C.
N1 - Funding information: Our paper greatly benefited from comments and suggestions of Devdeepta Bose, Colin Camerer, Enrico Diecidue, Thomas Langer, Hannes Mohrschladt, Daw-An Wu, and participants of the following meetings: Virtual Experimental Finance Workshop 2020 (Nijmegen, NL), German Finance Association Conference 2018 (Trier, GER), Research in Behavioral Finance Conference 2018 (Amsterdam, NL), International Network for Economic Research Conference 2018 (Göttingen, GER), Experimental Finance Conference 2018 (Heidelberg, GER), Finance Seminar 2018 (Münster, GER), Colin Camerer's group meetings in 2017/18 (Pasadena, USA), Experimental Finance Conference 2017 (Richmond, USA), SPUDM Conference 2017 (Haifa, IL), Financial Economics Seminar 2017 (Nijmegen, NL), and the Coping with Difficult Decisions Workshop 2015 (Düsseldorf, GER). Special thanks go to Philipp Decke and Artur Ehle for their invaluable support with oTree.
PY - 2023/9
Y1 - 2023/9
N2 - We explore in a series of incentivized experiments how stock market developments affect emotional arousal (proxied by pupil dilation, electrodermal activity, and heart rate variation), and how this emotional arousal affects investment behavior. Experiencing stock market downswings increases emotional arousal, while upswings do not trigger such an effect. The subsequent interplay between emotional arousal and investment behavior is by no means one-dimensional. The heightened level of emotional arousal after downswings reduces financial risk taking and thus the money put at stake, while the exposure to financial risks itself increases subsequent emotional arousal.
AB - We explore in a series of incentivized experiments how stock market developments affect emotional arousal (proxied by pupil dilation, electrodermal activity, and heart rate variation), and how this emotional arousal affects investment behavior. Experiencing stock market downswings increases emotional arousal, while upswings do not trigger such an effect. The subsequent interplay between emotional arousal and investment behavior is by no means one-dimensional. The heightened level of emotional arousal after downswings reduces financial risk taking and thus the money put at stake, while the exposure to financial risks itself increases subsequent emotional arousal.
KW - Emotional arousal
KW - Investment behavior
KW - Visualizations
UR - http://www.scopus.com/inward/record.url?scp=85142399329&partnerID=8YFLogxK
U2 - 10.1016/j.jbankfin.2022.106711
DO - 10.1016/j.jbankfin.2022.106711
M3 - Article
AN - SCOPUS:85142399329
VL - 154
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
SN - 0378-4266
M1 - 106711
ER -