Investors should listen to their gut feelings when taking risk…

Elise Payzan-Le Nestour  |  UNSW Business School  |  03 May 2023 |  0.50 CE

…though not unconditionally. Behavioural scientists have long embraced the view that emotions are not only unnecessary but disruptive. Yet the nascent field of Neurofinance, which studies how the brain perceives and reacts to financial risks, suggests that emotion is central to rational decision-making, and investors attuned to their emotions can make better decisions during critical market events. At the same time, ‘too much’ emotion can lead to financial mistakes caused by panic and irrational exuberance. The challenge, therefore, is for investo...

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