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Gazing through the bubble: an experimental investigation into financial risk-taking using eye-tracking

Toma, Filip-Mihai and Cepoi, Cosmin-Octavian and Kubinschi, Matei Nicolae and Miyakoshi, Makoto (2023) Gazing through the bubble: an experimental investigation into financial risk-taking using eye-tracking. Financial Innovation, 9 . Art. No. 28. ISSN 2199-4730. doi:10.1186/s40854-022-00444-4.

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Eye tracking can facilitate understanding irrational decision-making in contexts such as financial risk-taking. For this purpose, we develop an experimental framework in which participants trade a risky asset in a simulated bubble market to maximize individual returns while their eye movements are recorded. Returns are sensitive to eye movement dynamics, depending on the presented visual stimuli. Using eye-tracking data, we investigated the effects of arousal, attention, and disengagement on individual payoffs using linear and nonlinear approaches. By estimating a nonlinear model using attention as a threshold variable, our results suggest that arousal positively influences trading returns, but its effect becomes smaller when attention exceeds a certain threshold, whereas disengagement has a higher negative impact on reduced attention levels and becomes almost irrelevant when attention increases. Hence, we provide a neurobehavioral metric as a function of attention that predicts financial gains in boom-and-bust scenarios. This study serves as a proof-of-concept for developing future psychometric measures to enhance decision-making.

Item Type:Article
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URLURL TypeDescription
Toma, Filip-Mihai0000-0002-8817-945X
Cepoi, Cosmin-Octavian0000-0002-5529-4339
Kubinschi, Matei Nicolae0000-0002-3938-1168
Miyakoshi, Makoto0000-0002-4062-6679
Additional Information:This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit F-M. T. would like to thank Daniel Dinu and THE Q AGENCY for the provided support in terms of renting the eye-tracking equipment used to run the experiment. Acknowledgements are also directed toward his supervisor, Bogdan Negrea, for useful advice and guidance along the writing of the PhD thesis. The data and experiment design section were a part of the PhD thesis of the author, published upon PhD graduation at the Bucharest University of Economic Studies. This research received no external funding. Contributions. Conceptualization: F-MT; Data curation: F-MT; Formal analysis: F-MT, C-OC, MK and MM; Investigation: F-MT, C-OC, MK and MM; Project administration: F-MT; Supervision: F-MT; Methodology, F-MT; Software, F-MT; Validation, F-MT, C-OC, MK and MM; Writing—original draft preparation: F-MT; review and editing, F-MT, C-OC, MK and MM All authors read and approved the final manuscript. Ethics approval and consent to participate. We confirm that the manuscript has been submitted solely to the Financial Innovation and that it is not published, in press, or submitted elsewhere. We also confirm that all research meets the ethical guidelines, including adherence to the legal requirements of the studied countries. We confirm that we have seen, read, and understood the guidelines on copyright. Informed consent was obtained from all subjects involved in the study. The authors declare that they have no competing interests.
Record Number:CaltechAUTHORS:20230209-987934100.2
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ID Code:119169
Deposited By: Research Services Depository
Deposited On:14 Mar 2023 23:45
Last Modified:14 Mar 2023 23:45

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