Using non-invasive brain stimulation to test the role of self-control in investor behavior

We test whether self-control causally affects investor behavior with the non-invasive brain stimulation. Subjects trade stocks in an experimental asset market while their levels of self-control are exogenously varied by applying weak currents stimulation to a control-related brain area. We document that modulation of regional cortical excitability related to self-control significantly influences the propensity of realizing capital gains as well as capital losses. Our finding provides support for the role of self-control in the disposition effect and highlights the utility of using non-invasive brain stimulation to causally test the underlying mechanism of investor behavior.