Thursday, September 19, 2013

This Is Your Brain on a Financial Bubble

At this point, listening to politicians and pundits place blame on each other for the last half-decade of financial ruin has become sickening. What if there was more to the problem than just policy though? New neuroscience research is being published in the next issue of Neuron, and might take blame from the trading floor and pin it on traders' brains.

It's been five years since the collapse of Lehman Brothers, that iconic moment in which it looked more candid than ever that the finance industry—through predatory lending and bubble-bursting—had us headed for the tubes. In considering the brain activity of Wall Street traders, researchers looked at processes supporting the financial decisions that play into forming commodity and asset-based bubbles.

At the California Institute of Technology, student volunteer behaviors were studied as they traded in a fantasy style market. Participant brains were mapped using functional Magnetic Resonance Imaging (fMRI), which scans blood flow in the brain as an indication of activity.

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