Using functional magnetic resonance imaging (fMRI), researchers have shown that expert advice suppresses areas of the brain responsible for making financial judgments under risk.
In uncertain times like that of recession, many people feel unqualified to sort out the implications of their financial decisions, and thus seek the advice of a consultant on what choices to make.
In the study led by Gregory Berns, MD, PhD, professor of neuroeconomics and psychiatry at Emory University School of Medicine, researchers investigated the neural mechanisms through which advice is integrated into the financial decision making process.
"While the field of neuroeconomics has made progress in understanding the neurobiological basis of risky decision-making, the neural mechanisms through which external information is integrated in that process had not been studied before this," said Berns.
They asked the participants to make a series of financial choices between a guaranteed payment and a lottery while undergoing fMRI scanning.
During some portions of the testing, the participants had to make decisions on their own.
On the other hand during some portions they received advice from a financial expert about which choice to make.
"Results showed that brain regions consistent with decision-making were active in participants when making choices on their own; however, there occurred an offloading of the decision-making process in the presence of expert advice," said Jan B. Engelmann, PhD, Emory research fellow in the Department of Psychiatry and Behavioral Sciences, and first author of the study.
"The expert provided very conservative advice, which in our experiment did not lead to the highest earnings. But the brain activation results suggested that the offloading of decision making was driven by trust in the expert," explained C. Monica Capra, PhD, an economist in the Department of Economics at Emory and coauthor of the study.
"This study indicates that the brain relinquishes responsibility when a trusted authority provides expertise. The problem with this tendency is that it can work to a person''s detriment if the trusted source turns out to be incompetent or corrupt, said Berns.
The study was published in the March 2009 issue of the Public Library of Science (PLOS One).