Emotional Engagement and Trading Performance

• 成果类型: Article; Early Access
• 署名作者: Bossaerts, Peter; Fattinger, Felix; Rotaru, Kristian; Xu, Kaitong
• 署名单位: University of Cambridge; Vienna University of Economics & Business; Monash University; Monash University; University of Melbourne
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4883
• 发表日期: 2023
• 关键词: Financial Markets; emotions; decision making; asset pricing; SCR; ECG; heart rate

摘要

Emotional involvement is known to be necessary but not sufficient for good decision making in the face of uncertainty. It has been conjectured that emotional engagement in anticipation of risky outcomes constitutes good emotions. We introduce a new methodology to determine whether anticipatory emotional engagement is beneficial in the context of trading in financial markets. We focus on heart rate changes because they occur at a sufficiently high frequency to discern timing relative to events in the marketplace. After conservatively adjusting for multiple hypothesis testing, we find that participants whose heart rate changes anticipate their order submissions at inflated prices earn significantly more, whereas participants whose heart rate responds to their trades earn significantly less. By investigating cointegration between skin conductance response and the dynamics of individual portfolio values, we confirm the importance of emotional involvement in determining who makes or loses money.