Decision support and cognitive limitations in online share trading

Abstract

It is a risky undertaking for novice share traders to trade in a real world market. Their lack of experience and familiarity means they can struggle to adequately form correct pricing decisions for securities. Decision support systems can be designed to reduce cognitive burden, though within the finance literature their usefulness is little studied. The current study looks at the influence of cognitive abilities and decision making speed on financial performance, as well as the effect of providing decision support for novice traders. It was found that traders who had decision support consistently outperformed those who did not have support. The decision aid also mitigated the negative effect of higher decision making speeds and lower cognitive ability.