The conflict negativity: A neural correlate of value conflict and indecision during financial decision making

Abstract

Individuals struggle when making financial decisions, sometimes preferring lower future rewards over actively making decisions at all. Here, we examine how conflict deriving from objective and subjective value characteristics of stocks, as well as the behavioural and phenomenological correlates of decision conflict, are accompanied by variation in a thus far understudied ERP component, the conflict negativity (CN). In a novel EEG paradigm (N = 53), we simulated a financial decision situation in which participants made incentivized choices between different, sometimes conflicting, stock options. Our results indicate that participants take longer, are more undecided and less pleased, when choosing between conflicting options compared to choices where one option is obviously better than the alternative-even when choosing between two objectively good alternatives. We further provide preliminary evidence that the CN, a negative-going ERP recorded over the medial prefrontal cortex, not only reacts to conflict decisions but also predicts participants' behavioural indecision during choice. What is more, subjective value characteristics of stocks, impressions based on brand perception of the stock options, influenced affective and behavioral reactions over and above objective stock characteristics. While our results are at odds with assumptions made by classic economic theory, they can be applied to real world observations on private investor behaviour.

Color Texture Image Complexity—EEG-Sensed Human Brain Perception vs. Computed Measures

“…In addition, the synthetic fractals that look similar to chaotic structures induces further difficulty and uncertainty on the decision, being supplemented by the free choice for evaluating complexity, since no formal definition of complexity was suggested to the participants. This opinion is confirmed by the high ERP activity, even in the later interval (800-1200 ms) [77], suggesting a complex and a prolonged continuous background process, while also briefly showing a negative ERP over the prefrontal cortex for P300 (300-400 ms) in Figure 6 for the high complexity level suggesting indecisiveness [78]. Furthermore, the images' textural representations might be affected by uncertainties or inaccuracies when considering the edges of textural forms.…”