Volume 23, Issue 3 (Autumn 2021)                   Advances in Cognitive Sciences 2021, 23(3): 135-146 | Back to browse issues page

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Naghikhani M, Hatami J, Jahanitabesh A, kiani K. Effect of description-experience learning on cognitive shifting process and decision-making outcome in stock market. Advances in Cognitive Sciences. 2021; 23 (3) :135-146
URL: http://icssjournal.ir/article-1-1303-en.html
1- Institute for Cognitive Science Studies (ICSS)
2- University of California
3- Statistical Research and Training Center (SRTC)
Abstract:   (109 Views)
Introduction: In our ever-changing daily lives, we have to make decisions through cognitive processes ranging from conscious to unconscious (but controlled) decisions. William James (1890) believes that conscious thought is an interruption in our habits suggesting that we normally make less conscious decisions and more habitual decisions. Cognitive shifting between conscious thinking and habit have received various supports from numerous studies. Sutton & Louis (1994) supposed a switching cognitive gear to shift cognitive modes. One of the features of this process is the time to sense the right conditions for shifting the conscious mode to automatic mode — time to stability —and conscious mode —time to flexibility. Indeed, time to stability and time to flexibility play a vital role in systems under risky and uncertain decisions. In the stock market, investment decision-making is under risk and uncertain conditions where the environmental conditions are constantly shifting from low variability (stationary conditions) to high variability (nonstationary), and it is supposed that this shifting is in progress. In this constantly changing environment, decision-makers cognitive abilities can be developed so that they become both more sensitive to significant changes in stock market conditions (flexibility) and more robust to stationary stock market conditions (stability). This suggests that similar to other cognitive abilities; cognitive shifting can be developed through learning approaches such as experience and description learning. In experience learning, experience is a vector of learning information that results from interaction with the environment and human characteristics. In contrast, in descriptive learning, learning is displaying the status of a problem as a number, sentence, or image. The present study aimed to investigate the cognitive shifting process in stock market decision making and determine the effect of description-experience learning on the two characteristics of time to stability and time to flexibility of the cognitive shifting process and the outcome of the stock market decision. In addition, the effect of statistical literacy and risk tolerance variables on the time to stability and time to flexibility of the cognitive shifting process and the decision-outcome were analyzed as a second goal. 
Methods: The 54 participants were randomly allocated to the experience learning (30 people) and the description (24 people) learning groups and then invested in a simulated stock market for 60 consecutive days. A statistical literacy questionnaire was used to measure statistical literacy, and FinaMetrica was used as a risk tolerance measure. In addition, multiple change point detection methods and stationary test were used to study the cognitive shifting process, and multivariate analysis of covariance was used to analyze the data. 
Findings: Results supported the hypothesis that cognitive shifting process would be processed in stock market decision-making. Moreover, description- experience learning with risk tolerance had a significant effect on the time to stability and the time to the flexibility of cognitive shifting process and net worth; however, no significant effect was found in statistical literacy.
Conclusion: Our data contribute to the literature by showing that stock market decision-makers would become more sensitive to volatile market changes by applying description learning and representing more information. Accordingly, a takeaway message is that decision-making in stock market can be improved by adopting description learning and being increased risk tolerance. If replicated by future studies, these results will open a new avenue for research and have practical implications for educational settings.
Keywords: Description-Experience learning, Cognitive switching process, Risk tolerance, Statistical Literacy, Stock market
Full-Text [DOCX 156 kb]   (3 Downloads)    
Type of Study: Research |
Received: 2021/07/10 | Accepted: 2021/09/12 | Published: 2021/11/16

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