Neural Implications of Investment Banking Experience in Decision-Making Under Risk and Ambiguity

Abstract

Financial decision-making is governed by cognitive and emotional processes. However, it is possible to learn how to manage both before making a decision based on experience. Electroencephalography might provide some insight into what is behind these choices by analyzing the slow negativity preceding a risky decision, known as the decision preceding negativity (DPN). The DPN is involved in cognitive processes associated with the elaboration of the planned response as well as the anticipation of the affective motivational stimuli. Using monetary gamble under risk (outcome probabilities are known) and ambiguity (outcome probabilities are unknown), we studied the DPN in a group of investment bankers, to see if individual financial experience influences anticipatory potentials that precede choices. Our results showed that investment bankers are able to shorten their anticipatory decision-making process by having a DPN closer to motor response. As this occurs, the prefrontal and orbitofrontal brain areas under risk were activated due to the role that emotions play in financial decision-making. On the other hand, under the ambiguity condition, activation of the prefrontal areas was caused by cognitive regulation of emotion. Our conclusion is that financial experience also influences risky choices by shortening the decision-making process while balancing cognitive and emotional processes, which depend on the amount of missing information.