Finance - How can neuroscience help us understand risks?

How can neuroscience help us understand risks?

Why are some people more vulnerable to risk than others? Why do some people risk completely negative? How does the average person react to risk, and why?
Because neuroscience tells us more about how the brain works and how to make decisions, these are questions that many business leaders face, especially (but certainly not limited to) financial and insurance markets.
If we all manage to respond successfully to risk, everyone will retire with enough money and we will have fewer incidents to start. The world will be a more stable place if everyone takes risks fully, but we all know that this is not the case.
Early risk models
In the past 70 years, the first models that observed risk behavior have focused on the rather limited "expected benefit" theory: indicating that people value the potential outcome by multiplying the probability of something as much as they want to. .
However, in the real world, this theory was found to be incomplete. Later, the creation of Daniel Kaneman's theory helped him to win the Nobel Prize. People were supposed to measure results with respect to a reference point. However, these reference points are difficult to identify and can change unexpectedly.
While other models have tried to develop "risk science", most do not answer the question of how people actually make decisions and how to shape their vision for the future. Often logical logical processes that economists have predicted have not led to decision-making; biases and cognitive emotions play a more important role than previously expected.
While these cognitive biases and the group of emotional triggers are difficult to predict, neuroscience has the potential to add new layers to our understanding of decision-making and risk.
The potential of neuroscience.
The world is unpredictable and uncertain. It is therefore not surprising that there are no definitive "rules" that we can apply to people's response to risks.
However, the number of studies on brain performance has increased significantly since the use of the functional magnetic image on a large scale. There is great potential to discover more.
For example, in a study of mice at Stanford University, scientists discovered that a group of neurons is activated when choosing a safe option instead of a dangerous option; there is a possibility that these neurons also exist in the human brain, which can reveal important information About how to avoid risks.

Imagine studying the brains of stock exchange operators while making decisions based on their daily earnings. What happens when there are significant losses or profits? How does this change your decision making? How are risk behaviors published in the market? What are social cues and prejudices in playing? A better understanding of risk behavior may help prevent future "bubbles" and "blasts" in the stock market.
These experiments are carried out in neuroscience laboratories, and we can expect more research in the near future as major financial regulators and government regulators become more interested.

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