Abstract
Individuals struggle when making financial decisions, sometimes preferring to avoid difficult decisions and receive lower future rewards over actively deliberating between options of similar value. Here, we examine how conflict deriving from objective and subjective value characteristics of stocks, as well as the behavioural and phenomenological correlates of decision conflict, are accompanied by variation in a thus far understudied ERP component, the conflict negativity (CN). In a novel EEG paradigm (N = 53), we simulated a financial decision situation in which participants made incentivized choices between different, sometimes conflicting, stock options. Our results indicate that participants become slower, more undecided, and less pleased, when choosing between similar options compared to choices in which one option clearly outweighs the other. This effect even held when participants chose between two objectively good alternatives. We further provide preliminary evidence that the CN, a negative-going ERP recorded over the medial prefrontal cortex, is not only sensitive to decision conflict, but also predicts behavioural indecision. What is more, subjective value characteristics of stocks, impressions based on brand perception of the stock options, modestly influenced affective and behavioural reactions over and above objective stock characteristics. While our results are at odds with assumptions made by classic economic theory, they may serve as one out of several indicators as to why private investors seem to avoid financial decisions.
