Neuroscience and Consumer Finance
Developments in neuroscience research methods have allowed for considerable advancements in our understanding of the role of various parts of the brain in making decisions, and specifically, in making financial decisions. Of particular interest, research using functional magnetic resonance imaging (fMRI) analyzes changes in blood flow to various parts of the brain, which corresponds with an increased use of that area of the brain. fMRI research has discovered a great deal about the neural environment in which individuals make financial decisions. This chapter provides an overview of neuroscience and neuroscience research methods and highlights recent neuroscience research findings related to a variety of financial decisions consumers face, including purchase decisions, investment and portfolio management decisions, and choosing a financial advisor.
KeywordsFinancial decisions Framing effect Functional magnetic resonance imaging Hyperbolic discounting Investment decisions Loss aversion Neuroscience
The authors are very grateful for the ongoing guidance of Russell N. James, III, Ph.D., JD, CFP®, at Texas Tech University who allowed us to develop our interest in neuroscience research and who taught us most of what we know on the subject.
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