The framing effect and skin conductance responses

COVID-19 stressor reduces risk taking: the role of trait interoception

The Framing Effect (FE) demonstrated that the way two alternatives are displayed affects people's inclination to make a specific choice, showing a risk aversion when alternatives are displayed on positive frames and risk seeking in negative frames. Risk seeking in negative frames is closely linked to loss aversion. Moreover, classical research and the salience-of-losses hypothesis argues that stress may enhance the FE and loss aversion. Recent studies also suggest that the trait interoception and alexithymia could interact and moderate the framing susceptibility. However, experimental paradigms on stress could ignore variables such as threat perception. In this sense, COVID-19 pandemic has become a powerful real-life stressor in many countries. We aimed to study how real-life stressors influence decision-making under risk. A total of 97 participants were divided into a control (n = 48) and an experimental group (n = 49). The experimental group were exposed to a stressor manipulation, a 5 min COVID-19 lockdown documentary. Our results show that COVID-19-related stressors significantly decreased bet acceptance regardless of the frame, also reducing loss aversion. Moreover, interoception was a significant predictor of loss aversion under stress conditions. Our results do not support classical research on stress and FE.

Do Emotions Benefit Investment Decisions? Anticipatory Emotion and Investment Decisions in Non-professional Investors

Increasing financial trading performance is big business. A lingering question within academia and industry concerns whether emotions improve or degrade trading performance. In this study, 30 participants distributed hypothetical wealth between a share (a risk) and the bank (paying a small, sure, gain) within four trading games. Skin Conductance Response was measured while playing the games to measure anticipatory emotion, a covert emotion signal that impacts decision-making. Anticipatory emotion was significantly associated with trading performance but the direction of the correlation was dependent upon the share’s movement. Thus, anticipatory emotion is neither wholly “good” nor “bad” for trading; instead, the relationship is context-dependent. This is one of the first studies exploring the association between anticipatory emotion and trading behaviour using trading games within an experimentally rigorous environment. Our findings elucidate the relationship between anticipatory emotion and financial decision-making and have applications for improving trading performance in novice and expert traders.

Oscillatory brain activity associated with skin conductance responses in the context of risk

Understanding the neural correlates of risk-sensitive skin conductance responses can provide insights into their connection to emotional and cognitive processes. To provide insights into this connection, we studied the cortical correlates of risk-sensitive skin conductance peaks using electroencephalography. Fluctuations in skin conductance responses were elicited while participants played a threat-of-shock-card-game. Precise temporal information about skin conductance peaks were obtained by applying continuous decomposition analysis on raw electrodermal signals. Shortly preceding skin conductance peaks, we observed a decrease in oscillatory power in the frequency range between 3 and 17 Hz in occipitotemporal cortical areas. Atlas-based analysis indicated the left lingual gyrus as the source of the power decrease. The oscillatory power averaged across 3 to 17 Hz showed a significant negative relationship with the skin conductance peak amplitude. Our findings indicate a possible interaction between attention and threat perception.

The sure thing: The role of integral affect in risky choice framing

When faced with a decision, certain aspects of the decision itself shape our affective responses to choice options, which, in turn, influence our choices. These integral affective influences manifest as immediate feelings about choice options as well as the feelings that we anticipate we will feel after certain potential outcomes. We examined whether the effect of framing on risk taking can be explained through the mediating roles of immediate and anticipated affect. Two experiments were conducted using a gambling task. On each trial, participants were endowed a sum of money (e.g., $25) then presented with a choice between a sure option (leaving them with a portion of the initial endowment) and a gamble option (that could result in either keeping or losing the entire endowment). The sure option was framed differently across two within-participant conditions: as a gain (keep $20 from $25) or loss (lose $5 from $25). Experiment 1 examined whether immediate feelings toward choice options explain how framing the sure option as a loss versus a gain increases risk taking. Experiment 2 examined whether immediate and/or anticipated affect explain how framing guides risk taking. We found that the tendency to take risks to avoid sure losses was explained by immediate (not anticipated) affective evaluations of the sure option only. Individuals tended to take more risks when faced with sure losses due to greater negative immediate feelings that were evoked by sure losses relative to sure gains. (PsycINFO Database Record (c) 2019 APA, all rights reserved).