Imagine the toughest financial choice you’ve made lately, one in which you are virtually torn in which way to go: stock market investing, loan taking, buying a house, car, deciding what to do with your life savings. The anxiety experienced may have been the consequence of information overload; however, scientists suspect a more complicated biological phenomenon is the reason why.
When a brain is overloaded with too many decisions i.e. bidding on multiple items and ensuring the best deal is made on all, even experts become anxious and mentally exhausted – the more information absorbed, the less desired items they win and the more they overpay and make important errors.
Studies from Journal of Consumer Research
New studies revealed by the Journal of Consumer Research say one reason some consumers pursue riskier financial opportunities is because they feel socially conscious or isolated – the seeking of social acceptance is one of the most fundamental human needs.
Consumers are a lot more likely to sacrifice important resources to secure social contacts or even relationships – feeling socially rejected triggers the decision into making a riskier financial investment.
In one experiment, a group of people were asked to recall a social situation that left them feeling either included or isolated. They then had to select either a set of high-odds/low-reward or low-odds/high-reward gambling options. Situations that left a consumer feeling socially rejected caused riskier decisions, where the securing of money would ostensibly give them what they want out of the social system. One of the most common examples is a consumer choosing to delay financial decisions after a breakup or a fall out with friends or family.
Discoveries in Neuroscience
Other recent discoveries in neuroscience suggest that the neurotransmitters dopamine and serotonin (feel good chemicals also used in anti-depressants) play an important role in these financial decisions. Research also revealed that variants of two specific genes might be involved in risk and reward processing, which could influence financial risk taking.
The brain regions relating to decision-making are the anterior cingulate cortex, the orbitofrontal cortex and the ventromedial prefrontal cortex. Depending on decisions being made on the basis of personal choice or following advice from second party, distinct patterns of neural activation were shown in these regions.
Emotions also have a significant effect on the decision-making process. The neurobiological theory on making a decision usually occurs facing the uncertainty about whether one’s choice will benefit or harm. This theory holds that hard decisions are influenced by emotion, in the form of bodily states, extracted during the consideration of consequences and that mark different options for behaviour as being either advantageous or disadvantageous. This process involves interaction between neural systems that induce these states and neural systems that map these states.
If you think hard and recall a situation where a very risky decision needed to be made, be it stock market trading, gambling, or perhaps taking a high risk loan.
Somtime you just need to make the snap decision and decide if that is a viable option for you your emotions will kick in and it may or may not be the best choice East Side Lenders discuss viable option here see what they have to say. I’m sure you’ll be able to remember just what tipped the overall outcome in the end . If you were to take a deep breath and walk away, taking a few hours to deliberate the pros and cons, would you have made the same decision?