Findings & Publications

Social Comparison and Digital Engagement Practices

Social comparison is a form of social influence that motivates humans to take an action, especially when they compare themselves to someone better. At the same time, comparison to worse individuals helps with ego maintenance. Digital tools, such as social media, make social comparison more available and more pronounced. They put certain users in the spotlight, to keep other users engaged with the platform or service. This is an example of a digital engagement practice.

Many online investment apps highlight top performing traders and provide information about their performance, thus, inducing upward social comparison. We re-created this situation by conducintng an experiment where half of the participants received information about their own performance and about the performance about three other (real) investors who performed exceptionally well in the trading task. Individuals exposed to the upward trading comparison traded more riskily and more actively, but were less satisfied from their own performance than the investors without this exposure. There was no difference in earnings between these two groups. The participants were gender-balanced retail investors with a proven previous trading experience.

Andraszewicz, S., Kaszas, D., Zeisberger, S. & Hölscher, C. (2023). The influence of upward social comparison on retail trading behaviour. Scientific Reports, 13(1), 22713

Anticipatory Emotional Arousal during Bubbles and Crashes

Emotions are an integral part of trading and investing. Emotional arousal is regulated by subcortical brain structures, but it also manifests itself in bodily reactions such as pupil dilation, heart rate and micro-sweating. Micro-sweating increases galvanic skin conductivity, which can be continously measured with electrodes. We used this method while individuals traded during a market bubble and crash. We found that the galvanic skin conductivity of high earners was correlated and preceded the price pattern of an asset that they traded. This indicates that their anticipatory arousal was linked to the changing price trend. In contrast, low earners experiences high anticipatory arousal at the very beginning of the trading task and they disengaged later. This was related to their trading behaviour. They invested when the asset price already increased and they failed to sell their assets close to the peak price.

Wichary, S., Allenbach, M., von Helversen, B., Kaszas, D., Sterna, R., Hölscher, C. & Andraszewicz, S. Skin conductance predicts earnings in a market bubble-and-crash scenario, Under Review

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