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Bubble Brains

July 15, 2014

In stock trading simulations, people’s brains indicate whether or not they’ll get out before the bubble bursts.

Transcript

BOB HIRSHON (host):

Crowd of people gather outside the New York Stock Exchange following the Crash of 1929 LOC 3c23429v

A crowd of people gather outside the New York Stock Exchange following the Crash of 1929. (Library of Congress)

Bubble-resistant brain patterns. I’m Bob Hirshon and this is Science Update.

People can get rich riding stock market bubbles – if they get out in time. Now, researchers have identified distinctive patterns in the smart sellers’ brains. According to neuroscientist Read Montague, of Virginia Tech and University College London, even simulated stock trades produce bubbles. His team found that a brain region called the nucleus accumbens seemed to track the current price of a stock. People whose trading patterns closely matched this area’s activity got caught in the crash. Not so for those who came out ahead.

P. READ MONTAGUE (University College, London/Virginia Polytechnic Institute):

In the high earners, a region of your brain, the anterior insula, seemed to flag that a market bubble was

coming, and that flag correlated with them dumping their shares.

HIRSHON:
He notes that the anterior insula also monitors how your body feels – so a burst of activity there may reflect a “gut feeling” that it’s time to get out.  I’m Bob Hirshon for AAAS, the Science Society.

Jan Brueghel the Younger, Satire on Tulip Mania, c. 1640 Jan_Brueghel_the_Younger,_Satire_on_Tulip_Mania,_c._1640

Market bubbles are not a new phenomenon – as reflected in this satirical painting by Jan Brueghel the Younger, circa 1640, a commentary on the Tulip Mania market speculation bubble of 17th century Netherlands.