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Event-related brain potentials reflect predictive coding of anticipated economic change.

ABSTRACT: Research has demonstrated the importance of economic forecasts for financial decisions at the aggregate economic level. However, little is known about the psychological and neurophysiological mechanisms that economic forecasts activate at the level of individual decision-making. In the present study, we used event-related brain potentials (ERPs) to test the hypothesis that economic forecasts influence individuals' internal model of the economy and their subsequent decision behavior. Using a simple economic decision-making game, the Balloon Analogue of Risk Task (BART) and predictive messages about possible economic changes in the game before each block, we test the idea that brain potentials time-locked to decision outcomes can vary as a function of exposure to economic forecasts. Behavioural results indicate that economic forecasts influenced the amount of risk that participants were willing to take. Analyses of brain potentials indicated parametric increases of the N1, P2, P3a, and P3b amplitudes as a function of the level of risk in subsequent inflation steps in the BART. Mismatches between economic forecasts and decision outcomes in the BART (i.e., reward prediction errors) were reflected in the amplitude of the P2, P3a, and P3b, suggesting increased attentional processing of unexpected outcomes. These electrophysiological results corroborate the idea that economic messages may indeed influence people's beliefs about the economy and bias their subsequent financial decision-making. Our findings present a first important step in the development of a low-level neurophysiological model that may help to explain the self-fulfilling prophecy effect of economic news in the larger economy.

SUBMITTER: Petropoulos Petalas D

PROVIDER: S-EPMC7497516 | biostudies-literature | 2020 Oct

REPOSITORIES: biostudies-literature

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Event-related brain potentials reflect predictive coding of anticipated economic change.

Petropoulos Petalas Diamantis D Bos Stefan S Hendriks Vettehen Paul P van Schie Hein T HT

Cognitive, affective & behavioral neuroscience 20201001 5

Research has demonstrated the importance of economic forecasts for financial decisions at the aggregate economic level. However, little is known about the psychological and neurophysiological mechanisms that economic forecasts activate at the level of individual decision-making. In the present study, we used event-related brain potentials (ERPs) to test the hypothesis that economic forecasts influence individuals' internal model of the economy and their subsequent decision behavior. Using a simp ...[more]

PMID: 32812147

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Project description:Previous research has pointed out that the combination of orthographic and semantic-associative training is a more advantageous strategy for the lexicalization of novel written word-forms than their single orthographic training. However, paradigms used previously involve explicit stimuli categorization (lexical decision), which likely influence word learning. In the present study, we used a more automatic task (silent reading) to determine the advantage of the associative training, by comparing the brain electrical signals elicited in combined (orthographic and semantic) and single (only orthographic) training conditions. In addition, the learning effect (in terms of similar neurophysiological activity between novel and known words) was also tested under a categorization paradigm, enabling determination of the possible influence of the training task in the lexicalization process. Results indicated that novel words repeatedly associated with meaningful cues showed a higher attenuation of N400 responses than those trained in the single orthographic condition, confirming the higher facilitation in the lexico-semantic processing of these stimuli, as a consequence of semantic associations. Moreover, only when the combined training was carried out in the reading task did novel words show similar N400 responses to those elicited by known words, suggesting the achievement of a similar lexical processing to known words. Crucially, when the training is carried out under a demanding task context (lexical decision), known words exhibited positive enhancement within the N400 time window, contributing to maintaining N400 differences with novel trained words and confounding the outcome of the learning. Such deflection-compatible with the modulation of the categorization-related P300 component-suggests that novel word learning could be influenced by the activation of categorization-related processes. Thus, the use of low-demand tasks arises as a more appropriate approach to study novel word learning, enabling the build-up process of mental representations, which probably depends on pure lexical and semantic factors rather than being guided by categorization demands.

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Event-related brain potentials reflect predictive coding of anticipated economic change.

Publications

Event-related brain potentials reflect predictive coding of anticipated economic change.

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