Project

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Behavioural Risk, Visual Perception, and Decision Making in Financial Contexts

English title Behavioural Risk, Visual Perception, and Decision Making in Financial Contexts
Applicant Cecchi Ariel Sebastianos
Number 171750
Funding scheme Early Postdoc.Mobility
Research institution
Institution of higher education Institution abroad - IACH
Main discipline Philosophy
Start/End 01.02.2017 - 31.07.2018
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All Disciplines (3)

Discipline
Philosophy
Economics
Psychology

Keywords (10)

Cognitive influences on perception; Behavioural finance; Behavioural risk; Predictive coding; Decision making; Loss aversion; Affective influences on perception; Behavioural economics; Contextual influences; Visual perception

Lay Summary (French)

Lead
Les services financiers sont parfois complexes et difficiles à comprendre. Par conséquent, les individus ne prennent pas toujours de décisions adaptées à leur intérêt personnel. Le projet examine la manière dont les consommateurs novices et experts prennent de décisions financières sur la base des informations visuelles. Plus précisément, il étudie comment les états cognitifs et affectifs liés au risque dans les contextes financiers affectent la perception de graphiques et de tableaux et influencent les décisions financières des consommateurs. Le projet vise deux objectifs. Premièrement, celui d'expliquer la relation entre les états liés au risque, la perception, la prise de décision et les contextes financiers. Et deuxièmement, celui d’offrir une série de lignes directrices sur la manière dont l'information visuelle doit être présentée afin d'aider les consommateurs à prendre de meilleures décisions.
Lay summary

Le projet étudie comment les états cognitifs et affectifs liés au risque dans les contextes financiers influencent la perception visuelle et les décisions du sujet. Le but est celui d'examiner les spécificités de la psychologie du consommateur dans le domaine de la finance ainsi que les mécanismes qui influencent leur perception et leurs décisions.

Le présent projet comporte trois modules. Le premier module étudie le concept du risque financier depuis la perspective du sujet, c'est-à-dire, l'évaluation personnelle du danger de subir une perte d’argent. L'accent est mis sur l'analyse de la corrélation du risque avec la psychologie de l'aversion à la perte et de l'argent. L'objectif est d'identifier les états cognitifs et affectifs associés à ce concept. Le second module examine les effets que les états liés au risque ont sur le système visuel. Finalement, la dernière partie étudie les effets de ces états sur les décisions des consommateurs. Le projet est fondé sur de nouvelles perspectives au sujet de la cognition humaine selon lesquelles la cognition est le résultat de prédictions.

Le projet a deux objectifs. Premièrement, celui-ci cherche à expliquer la relation entre le contexte cognitif et affectif des sujets et la manière dont ils perçoivent et prennent de décisions au sujet de services financiers. Deuxièmement, l’objectif est celui d’offrir aux chercheurs et professionnels une série de lignes directrices sur la manière dont l'information visuelle doit être présentée afin d'atténuer l'impact des états liés au risque sur la perception et les décisions des consommateurs.

Direct link to Lay Summary Last update: 02.02.2017

Lay Summary (English)

Lead
Financial services are sometimes complex and difficult to understand. As a result, individuals do not always make decisions suitable to their own personal interest. The project tackles the problem of how lay subjects and experts make decisions about financial services based on visual information. Specifically, it investigates how cognitive and affective states related to risk in financial contexts affect the subjects' perception of visual displays and influence the way they make financial decisions. The project has two aims. Firstly, it attempts to explicate the relationship between risk-related states, perception, decision making, and financial contexts. And secondly, it aims at offering a series of guidelines on how to appropriately present visual information in order to help consumers to make better decisions.
Lay summary

The project investigates how cognitive and affective states related to behavioural risk in financial contexts influence the subject’s visual perception and decisions. It examines the specificities of consumers’ psychology in financial services and the mechanisms that influence their perception and decisions.

The present project involves three modules. The first module investigates the concept of Behavioural Financial Risk, i.e., the subject’s evaluation of the danger to undergo some losses of wealth. It analyses the correlation of risk with the psychology of loss aversion and money. The aim is to identify the cognitive and affective states associated with this concept. The second module scrutinises the effects that risk-related states have on the subjects' perception of visual displays (e.g., graphs and charts). The last section investigates the effects of these states on the consumers' decisions. I will follow new trends on a unified framework of human cognition according to which cognition depends on predictions.

The project has two aims. Firstly, it seeks to explicate the relationship between the subjects' cognitive and affective background and the way they perceive and make decision about financial services. Secondly, it aims at offering researchers and practitioners a series of guidelines on how to appropriately present visual information in order to mitigate the impact of risk-related states on their consumers' perception and decisions.

Direct link to Lay Summary Last update: 02.02.2017

Responsible applicant and co-applicants

Publications

Publication
Cognitive penetration of early vision in face perception
Cecchi Ariel S. (2018), Cognitive penetration of early vision in face perception, in Consciousness and Cognition, 1.

Collaboration

Group / person Country
Types of collaboration
Ghent University Belgium (Europe)
- in-depth/constructive exchanges on approaches, methods or results
- Publication
- Research Infrastructure
- Exchange of personnel

Scientific events

Active participation

Title Type of contribution Title of article or contribution Date Place Persons involved
Judgemental Forecasting Research Group Talk given at a conference The Influence of Information Type in Financial Forcasting 16.03.2018 UCL, London, Great Britain and Northern Ireland Cecchi Ariel Sebastianos;


Communication with the public

Communication Title Media Place Year
Media relations: print media, online media Moins d’une prediction boursiere sur deux s’avere correcte Le Temps Western Switzerland 2017
Media relations: print media, online media Avec une montre connectee, le trader gere mieux son stress Le Temps Western Switzerland 2017
Media relations: print media, online media La culture d’entreprise peut favoriser la malhonnetete Le Temps Western Switzerland 2017
Media relations: print media, online media La psychologie liee a la disparition du cash Le Temps Western Switzerland 2017
Media relations: print media, online media Le choix entre performance et gestion du risque Le Temps Western Switzerland 2017
Media relations: print media, online media Les banques vous connaıtront encore mieux Le Temps Western Switzerland 2017

Abstract

The project titled ``Behavioural Risk, Visual Perception, and Decision Making in Financial Contexts'' is at the intersection of philosophy, economics, behavioural psychology and neuroscience. It investigates how cognitive and affective states related to behavioural risk influence the subject’s visual perception and decision-making processes in financial contexts.Financial services are sometimes complex and difficult to understand. As a result, individuals do not always make decisions adapted to their own personal interest. The project tackles the problem of how lay subjects and experts make financial decisions based on visual information. I seek to understand consumer's psychology and the mechanisms that influence their perception and decisions.The present project involves three distinct modules. The first module concerns the concept of Behavioural Financial Risk. In general terms, behavioural financial risk refers to the subject's evaluation of the danger to undergo some losses of wealth (money) as a consequence of negative events. Hence behavioural risk correlates with two concepts: loss and money. The first goal of this research project is to investigate behavioural financial risk from the perspective of the analysis of the psychological correlates of loss aversion and money. The expected results intend to provide a conceptual understanding of behavioural financial risk as well as to identify the cognitive and affective states associated with this concept.The second module tackles the issue of how cognitive and affective risk-related states influence the visual system and alter the way subjects see graphical displays. This part will be devoted to scrutinise, on the one hand, how risk-related states influence the subject's visual perception of graphs and charts (e.g., in a retirement account) and, on the other hand, how risk-related states correlate with the perceptual context. To do so, I will consider a unified model of cognition, i.e., Predictive Coding, according to which risk-related states are context dependent. The module's output will provide an explanation of the effects that risk-related states have on the consumer's visual perception, and explicate the interdependence between these states, visual perception, and the context. The third module of this research project will study the influence of cognitive and affective risk-related states on decision-making process. Risk-related states (e.g., fear) can impact on the subject's psychology and bring her to make suboptimal decisions. This section will analyse both the interaction between risk-related states and decision making and the connection between the former and the context in which the decision takes place. Based on the predictive coding framework, the output of this module aims at explicating the relationship between risk-related states, visual perception, decision making, and contextual influences. In addition, it will offer a series of guidelines on how to appropriately present visual information (e.g., charts, graphs) in order to mitigate the impact of risk-related states on the consumer's visual perception and decisions.
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