Insights from Neuroscience towards Investment Decision Making

Anum Khan, Syed Muhammad Noaman Ahmed Shah, Muhammad Shujaat Mubarik

Research output: Contribution to journalArticlepeer-review

Abstract

As the advancement in the field of finance continues, the human brain plays a vital role in understanding the investment behavior. Over the passage of time, it emerges as a challenge for traditional views to make decisions by the investors. This research highlights the impact of neurotransmitters on investment options and their relationship with information sources. Moreover, this study focuses on the following aspects: (i) Role of Emotional Intelligence (EI), (ii) Revealing the cognitive biases which influences investment decisions. Data collection is done through a close-ended questionnaire from 719 retail and institutional investors in the financial and stock market of Pakistan (PSX). Data is then analyzed with the help of Partial Least Squares Structural Equation Modeling (PLS-SEM). The study reveals a substantial relationship between neurotransmitters, information sources, and investment decisions. It is quite notable that EI was found to have no significant regulating effect on the relationship between neurotransmitters and investment decisions. This research study corroborates the critical influence of neurotransmitters on investment decision making, highlighting the cognitive biases that direct the investment behaviors. The contribution of the research expands to a deeper comprehension of cognitive mechanisms in the age of neuroscientific financial exploration and giving the novel outlooks within the field.

Original languageEnglish
Pages (from-to)88-109
Number of pages22
JournalEconomic Research Guardian
Volume14
Issue number2
Publication statusPublished - 2024

Keywords

  • Emotional Intelligence
  • Information Source
  • Investment Decisions
  • Neurofinance
  • Neurotransmitters

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Sociology and Political Science
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)

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