Good News or Bad News, Which Do You Want First? The Importance of the Sequence and Organization of Information for Financial Decision-Making: A Neuro-Electrical Imaging Study

Investment decisions are largely based on the information investors received from the target firm. Thaler introduced the hedonic editing framework, in which suggests that integration/segregation of information influence individual's perceived value. Meanwhile, when evaluating the evidence and information in a sequence, order effect and biases have been found to have an impact in various areas. In this research, the influence of the Organization of Information (Integration vs. Segregation) and the Sequence of Information (Negative-Positive order vs. Positive-Negative order) on individual's investment decision-making both at the behavioral level (decision) and neurometrix level (measured by an individual's emotion and Approach Withdraw tendency) was assessed for the three groups of information: a piece of Big Positive Information and a piece of Small Negative Information, a piece of Big Negative Information and a piece of Small Positive Information, and a piece of Small Negative information. The behavioral results, which are an individual's final investment decision, were consistent for all three scenarios. In general, individuals will invest more/retire less when receiving two pieces of information in a Negative-Positive order. However, the neurometric results (Emotional Index, Approach Withdraw Index and results from LORETA) show differences among information groups. An effect of the Sequence of Information and the Organization of Information was found for the different scenarios. The results suggest that in the scenarios that involve large-scale information, the organization of information (Integration vs. Segregation) influences the emotion and Approach Withdraw tendency. The results of this investigation should provide insight for effective communication of information, especially when large-scale information is involved.