Effect of description-experience learning on cognitive shifting process and decision-making outcome in stock market

William James (1890) defines the relationship between thinking and habit as follows: thinking is an interruption between habits, and humans are constantly shifting cognitively between thinking and habit. The present study aimed to investigate the cognitive shifting process between habit (habitual decision making) and thinking (consensus decision making) in stock market decision making. Also, the effect of description-experience learning, statistical literacy, and risk tolerance on the cognitive shifting process and decision-making outcome were taken into the study.

Fifty-four participants were randomly allotted to experience learning group (n=30) and description learning group (n=24) and then regularly invested in a simulated stock market for sixty consecutive days. In addition, the level of statistical literacy was measured using a researcher-made questionnaire, and the FinaMetrica was used as a risk tolerance measure. In order to data analysis, multiple change-point detection methods and multivariate analysis of covariance were used in R and SPSS-26 software.

The results, therefore, supported the hypothesis cognitive shift process between habitual decision making and conscious decision making. Also, the effects of description-experience learning and risk tolerance on time to stabilization and time of flexibilization cognitive of shifting process and decision-making outcome were supported, while statistical literacy is ineffective in this regard.

Description learning and high-level risk tolerance can increase flexibility and improve investment decision-making in the stock market. Stock exchange organizations can prescribe descriptive information analysis and increase risk tolerance as part of users' decision-making strategies.