Gut feelings influence financial decisions

A person's gut feelings can often heavily influence the financial decisions they make, new research has suggested. Published in the journal Cognitive, Affective and Behavioural Neuroscience, the study revealed rational thought can be overridden when people deem monetary offers to be unfair.

Investigators from the University of Exeter, Medical Research Council Cognition, the Brain Sciences Unit and University of Cambridge found individuals have a physical response that may reject a beneficial proposition if they believe it is unfair.

The findings suggested the way people think can be governed by the body, with the heart effectively ruling the head.

In addition, the investigation showed those in-tune with their bodies are more prone to going with whatever their gut feeling tells them.

Dr Barney Dunn of the University of Exeter stated: "This research supports the idea that what happens in our bodies can sometimes shape how we think and feel in our minds."

He added there may therefore be a degree of truth to sayings such as 'following your heart'.

Kim Stephenson, a Chartered Psychologist and financial adviser:

"Obviously, cross cultural studies of the Ultimatum Game have repeatedly shown this same pattern.  People make ‘fairer’ offers than are logically necessary (and leave tips in restaurants when they don't have to) and resent and reject what they see as unfair offers even if this rejection involves financial costs to them.

The potentially novel finding is that this appears to demonstrate an identifiable neurological correlate of the decision process in this case, but maybe the most important point here is that economic theory’s notion of how people ought to behave often has little connection with how they really do behave."

Kim Stephenson blogs for ClearWater.

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