An ALE Meta-Analysis on Investment Decision-Making

Abstract

It is claimed that investment decision-making should rely on rational analyses based on facts and not emotions. However, trying to make money out of market forecasts can trigger all types of emotional responses. As the question on how investors decide remains controversial, we carried out an activation likelihood estimation (ALE) meta-analysis using functional magnetic resonance imaging (fMRI) studies that have reported whole-brain analyses on subjects performing an investment task. We identified the ventral striatum, anterior insula, amygdala and anterior cingulate cortex as being involved in this decision-making process. These regions are limbic-related structures which respond to reward, risk and emotional conflict. Our findings support the notion that investment choices are emotional decisions that take into account market information, individual preferences and beliefs.

Keywords: amygdala; anterior cingulate cortex; anterior insula; investor; neuroeconomics; reward; risk; stock; ventral striatum.

Figure 1

Search flow diagram adapted from PRISMA guidelines.

Figure 2

Overview of significant clusters resulting from the activation likelihood estimation (ALE) meta-analysis regarding investment decision-making. The four clusters found during risky and safe investments were (1) ventral striatum + amygdala + anterior cingulate cortex; (2) the ventral striatum; (3) the anterior insula; and (4) the occipital cortex. The clusters corrected for multiple comparisons are outlined in black. L = left, R = right.

Figure 3

Schematic representation of brain activation reported in the ALE meta-analysis study during investment decision-making. Sell orders are shown in red, buy orders are in blue, and neither sell nor buy orders (hold) are in orange. Each order is accompanied by increased (▲) or decrease (▼) neural activity in certain brain areas. Prediction errors appear in green, where (*) indicates that reappraisal strategies were implemented. The location of each activation in the figure is based on the situation of the market, being under bubble or non-bubble conditions. Black indicates brain connectivity activation under both market conditions. AIns = anterior insula; PPC = posterior parietal cortex; NAcc = nucleus accumbens; vmPFC = ventromedial prefrontal cortex; ACC = anterior cingulate cortex; dlPFC = dorsolateral prefrontal cortex; and IPL = inferior parietal lobule.