Transferring cognitive talent across domains to reduce the disposition effect in investment

Abstract We consider Theory of Mind (ToM), the ability to correctly predict the intentions of others. To an important degree, good ToM function requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social cont...

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Autores principales:	Kristian Rotaru, Petko S. Kalev, Nitin Yadav, Peter Bossaerts
Formato:	article
Lenguaje:	EN
Publicado:	Nature Portfolio 2021
Materias:	Medicine R Science Q
Acceso en línea:	https://doaj.org/article/a3b951c1a54e40e1977aadb0617059cd
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spelling	oai:doaj.org-article:a3b951c1a54e40e1977aadb0617059cd2021-12-05T12:12:39ZTransferring cognitive talent across domains to reduce the disposition effect in investment10.1038/s41598-021-02596-22045-2322https://doaj.org/article/a3b951c1a54e40e1977aadb0617059cd2021-11-01T00:00:00Zhttps://doi.org/10.1038/s41598-021-02596-2https://doaj.org/toc/2045-2322Abstract We consider Theory of Mind (ToM), the ability to correctly predict the intentions of others. To an important degree, good ToM function requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer good ToM function, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high scores on the social-cognitive dimension of ToM function. No such transfer is observed in subjects who score well only on the social-perceptual dimension of ToM function. Our findings open up a promising way to exploit cognitive talent in one domain in order to alleviate cognitive deficiencies elsewhere.Kristian RotaruPetko S. KalevNitin YadavPeter BossaertsNature PortfolioarticleMedicineRScienceQENScientific Reports, Vol 11, Iss 1, Pp 1-9 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Medicine R Science Q
spellingShingle	Medicine R Science Q Kristian Rotaru Petko S. Kalev Nitin Yadav Peter Bossaerts Transferring cognitive talent across domains to reduce the disposition effect in investment
description	Abstract We consider Theory of Mind (ToM), the ability to correctly predict the intentions of others. To an important degree, good ToM function requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer good ToM function, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high scores on the social-cognitive dimension of ToM function. No such transfer is observed in subjects who score well only on the social-perceptual dimension of ToM function. Our findings open up a promising way to exploit cognitive talent in one domain in order to alleviate cognitive deficiencies elsewhere.
format	article
author	Kristian Rotaru Petko S. Kalev Nitin Yadav Peter Bossaerts
author_facet	Kristian Rotaru Petko S. Kalev Nitin Yadav Peter Bossaerts
author_sort	Kristian Rotaru
title	Transferring cognitive talent across domains to reduce the disposition effect in investment
title_short	Transferring cognitive talent across domains to reduce the disposition effect in investment
title_full	Transferring cognitive talent across domains to reduce the disposition effect in investment
title_fullStr	Transferring cognitive talent across domains to reduce the disposition effect in investment
title_full_unstemmed	Transferring cognitive talent across domains to reduce the disposition effect in investment
title_sort	transferring cognitive talent across domains to reduce the disposition effect in investment
publisher	Nature Portfolio
publishDate	2021
url	https://doaj.org/article/a3b951c1a54e40e1977aadb0617059cd
work_keys_str_mv	AT kristianrotaru transferringcognitivetalentacrossdomainstoreducethedispositioneffectininvestment AT petkoskalev transferringcognitivetalentacrossdomainstoreducethedispositioneffectininvestment AT nitinyadav transferringcognitivetalentacrossdomainstoreducethedispositioneffectininvestment AT peterbossaerts transferringcognitivetalentacrossdomainstoreducethedispositioneffectininvestment
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Transferring cognitive talent across domains to reduce the disposition effect in investment

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