Year: 2001
Type: report
Abstract: A longstanding controversy in economics and finance is whether financial markets are governed by rational forces or by emotional responses.We study the importance of emotion in the decisionmaking process of professional securities traders by measuring their physiological characteristics, e.g., skin conductance, blood volume pulse, etc., during live trading sessions while simultaneously capturing real-time prices from which market events can be defined.In a sample of 10 traders, we find significant correlation between electrodermal responses and transient market events, and between changes in cardiovascular variables and market volatility.We also observe differences in these correlations among the 10 traders which may be systematically related to the traders' levels of experience.
DOI: 10.3386/w8508
Authors: Andrew Lo, Dmitry Repin
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2890994228