Thinking, feeling and deciding: The influence of emotions on the decision making and performance of traders

Abstract

SummaryWe report on a qualitative investigation of the influence of emotions on the decision making of traders in four City of London investment banks, a setting where work has been predominantly theorized as dominated by rational analysis. We conclude that emotions and their regulation play a central role in traders' decision making. We find differences between high and low performing traders in how they engage with their intuitions, and that different strategies for emotion regulation have material consequences for trader behavior and performance. Traders deploying antecedent-focused emotional regulation strategies achieve a performance advantage over those employing primarily response-focused strategies. We argue that, in particular, response-focused approaches incur a performance penalty, in part because of the reduced opportunity to combine analysis with the use of affective cues in making intuitive judgments. We discuss the implications for our understanding of emotion and decision making, and for traders' practice.

The Effect of Emotions and Social Behavior on Performance in a Collaborative Serious Game Between Humans and Autonomous Robots

“…Emotions were found to have a positive influence on decision-making and to facilitate it [28][29][30]. It was found that the experience of emotions is a mandatory prerequisite for advantageous decision-making [43], therefore having a positive impact on performance [44][45][46][47]. Russell [48] generally classified emotions by their independent components, arousal and valence.…”

Inteligência e Contágio Emocional: um estudo com trabalhadores brasileiros e angolanos

“…Isso pode ser explicado pela expectativa do papel profissional, em que é esperado do gestor estar mais preparado para lidar com as suas emoções e as de sua equipe, visto que o seu desempenho depende em grande parte das interações sociais que constrói (Fenton-O'Creevy et al, 2011). Essa prontidão também inclui o uso adequado do tipo de emoção a ser expressa ou exibida para cativar a equipe (Cardon, 2008;Côtè & Hideg, 2011).…”

“…Finalmente, a dimensão utilização das emoções é definida como a efetividade no uso da informação emocional e inclui: planejamento flexível, pensamento criativo, atenção redirecionada e motivação (Schutte et al, 1998). Um estudo sobre o papel da emoção na tomada de decisões de negociadores concluiu que aqueles que empregaram estratégias de regulação de ação profunda tiveram melhor desempenho quando comparados aos que utilizaram estratégias de regulação de ação superficial (Fenton-O'Creevy, Soane, Nicholson, & Willman, 2011).…”

Information Token Driven Machine Learning For Electronic Markets: Performance Effects In Behavioral Financial Big Data Analytics.

“…Taking an information systems perspective, the Editor-in-Chief of MISQ emphasized the critical role of behavioral analytics across domains stating "Precise capture of individual behavior and surrounding events also allows for spotting population trends and the impact of events.." (Goes, 2014). Behavioral effects in financial markets are driven by cognitive biases (Barberis & Thaler, 2003), emotions and feelings (O'Creevy, et al, 2011;Cipriani, et al) and personalized purposes or subjective expectations (Schwartz, et al, 2010;Sahi, et al, 2013). With the advent of internetof-things (IoT) and its promise of rich voluminous continuous real-time high quality consumer behavior data, FBD is set to explode in quantity, acceleration of data acquisition, types of data and the essential distinctiveness of characteristics of data -aligned with the four V's of big data -Volume, Velocity, Variety and Veracity (Chen, et al, 2012).…”