Gazing through the bubble: an experimental investigation into financial risk-taking using eye-tracking

Gazing through the bubble: an experimental investigation into financial risk-taking using eye-tracking

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Abstract Eye tracking can facilitate understanding irrational decision-making in contexts such as financial risk-taking.For this purpose, we develop an experimental framework in which participants trade a Door Hinge Shim risky asset in a simulated bubble market to maximize individual returns while their eye movements are recorded.Returns are sensitive to eye movement dynamics, depending on the presented visual stimuli.Using eye-tracking data, we investigated the effects of arousal, attention, and disengagement on individual payoffs using linear and nonlinear approaches.

By estimating a nonlinear model using attention as a threshold variable, our results suggest that arousal positively influences trading returns, but its effect becomes smaller when attention exceeds a certain threshold, whereas disengagement has a higher negative impact on reduced attention levels and becomes almost irrelevant when attention increases.Hence, we provide a neurobehavioral metric as a function of attention that predicts financial gains Ironing Stations in boom-and-bust scenarios.This study serves as a proof-of-concept for developing future psychometric measures to enhance decision-making.