Brain activity foreshadows stock price dynamics
https://www.jneurosci.org/content/41/14/3266
Many try but fail to consistently forecast changes in stock prices. New evidence, however, suggests that anticipatory affective brain activity may not only predict individual choice, but also may forecast aggregate choice.
Assuming that stock prices index collective choice, we tested whether brain activity sampled during the assessment of stock prices could forecast subsequent changes in the prices of those stocks.
In two neuroimaging experiments, a combination of previous stock price movements and brain activity in a region implicated in processing uncertainty and arousal forecast next-day stock price changes—even when behavior did not.
These findings challenge traditional assumptions of market efficiency by implying that neuroimaging data might reveal “hidden information” capable of foreshadowing stock price dynamics.