A Study On Trading And Emotions

A Study On Trading And Emotions by Brince Wilford, Covenant Capital Management

In 2005 researchers from Stanford, Carnegie Mellon and the Univ. of Iowa published a study focusing on the role that human emotion plays in investment decisions. (See “Investment Behavior and the Negative Side of Emotion” Shiv, Loewenstein, Bechara, and Damasio) The study investigated how normal participants, people with normal emotional brain functions (the “normal” group), differed from people with lessened emotional function. The “non-normal” group was comprised of subjects that had stable focal lesions in the emotional regions of the brain. That is to say, they had conditions in which the emotional areas of their brains were less responsive than those of the normal group....