Thinking like a trader selectively reduces individuals' loss aversion.

Research on emotion regulation has focused upon observers' ability to regulate their emotional reaction to stimuli such as affective pictures, but many other aspects of our affective experience are also potentially amenable to intentional cognitive regulation. In the domain of decision-making, recent work has demonstrated a role for emotions in choice, although such work has generally remained agnostic about the specific role of emotion. Combining psychologically-derived cognitive strategies, physiological measurements of arousal, and an economic model of behavior, this study examined changes in choices (specifically, loss aversion) and physiological correlates of behavior as the result of an intentional cognitive regulation strategy. Participants were on average more aroused per dollar to losses relative to gains, as measured with skin conductance response, and the difference in arousal to losses versus gains correlated with behavioral loss aversion across subjects. These results suggest a specific role for arousal responses in loss aversion. Most importantly, the intentional cognitive regulation strategy, which emphasized "perspective-taking," uniquely reduced both behavioral loss aversion and arousal to losses relative to gains, largely by influencing arousal to losses. Our results confirm previous research demonstrating loss aversion while providing new evidence characterizing individual differences and arousal correlates and illustrating the effectiveness of intentional regulation strategies in reducing loss aversion both behaviorally and physiologically.

Evidence for recovery of fear following immediate extinction in rats and humans.

Fear responses can be eliminated through extinction, a procedure involving the presentation of fear-eliciting stimuli without aversive outcomes. Extinction is believed to be mediated by new inhibitory learning that acts to suppress fear expression without erasing the original memory trace. This hypothesis is supported mainly by behavioral data demonstrating that fear can recover following extinction. However, a recent report by Myers and coworkers suggests that extinction conducted immediately after fear learning may erase or prevent the consolidation of the fear memory trace. Since extinction is a major component of nearly all behavioral therapies for human fear disorders, this finding supports the notion that therapeutic intervention beginning very soon after a traumatic event will be more efficacious. Given the importance of this issue, and the controversy regarding immediate versus delayed therapeutic interventions, we examined two fear recovery phenomena in both rats and humans: spontaneous recovery (SR) and reinstatement. We found evidence for SR and reinstatement in both rats and humans even when extinction was conducted immediately after fear learning. Thus, our data do not support the hypothesis that immediate extinction erases the original memory trace, nor do they suggest that a close temporal proximity of therapeutic intervention to the traumatic event might be advantageous.