Resting Vagally Mediated Heart Rate Variability is Associated with Financial Risk Preferences under Stress

Abstract

Business financial risk-taking usually occurs under conditions of stress. Biologically, the stress response has two components: one linked to the hypothalamic-pituitary-adrenal (HPA) axis and the other to the autonomic nervous system (ANS). The existing literature on financial risk-taking has primarily focused on the effects of cortisol, related to the HPA axis. This article, however, examines the influence of the ANS, as measured by vagally mediated heart rate variability at rest (VMHRV). A total of 121 participants (60 female) were divided based on whether their VMHRV was below the median. Participants were then randomly assigned to either a stress test group (tsst) or a control group. Financial risk preferences were assessed using an incentive-compatible 50-50% Eckel and Grossman task. Participants in the tsst with high VMHRV had a higher probability of choosing riskier lotteries compared to the other participants (P = 0,0189). This finding suggests that greater parasympathetic modulation enables individuals to make riskier financial decisions when under stress. Thus, the article contributes to the literature by demonstrating that individuals with a higher physiological capacity to cope with external stressors are less risk-averse in financial decisions under social stress conditions.

Keywords

• Autonomous nervous system
• risk aversion
• decision making
• heart rate variability
• stress