Faculty Collaboration Database

The performance-variability paradox, financial decision making, and the curious case of negative Hurst exponents. Nonlinear Dynamics Psychol Life Sci 2014 Jul;18(3):297-328

Date

06/05/2014

Pubmed ID

24894267

Scopus ID

2-s2.0-84901987407 (requires institutional sign-in at Scopus site)   11 Citations

Abstract

This study examined the relationship between performance variability and actual performance of financial decision makers who were working under experimental conditions of increasing workload and fatigue. The rescaled range statistic, also known as the Hurst exponent (H) was used as an index of variability. Although H is defined as having a range between 0 and 1, 45% of the 172 time series generated by undergraduates were negative. Participants in the study chose the optimum investment out of sets of 3 to 5 options that were presented a series of 350 displays. The sets of options varied in both the complexity of the options and number of options under simultaneous consideration. One experimental condition required participants to make their choices within 15 sec, and the other condition required them to choose within 7.5 sec. Results showed that (a) negative H was possible and not a result of psychometric error; (b) negative H was associated with negative autocorrelations in a time series. (c) H was the best predictor of performance of the variables studied; (d) three other significant predictors were scores on an anagrams test and ratings of physical demands and performance demands; (e) persistence as evidenced by the autocorrelations was associated with ratings of greater time pressure. It was concluded, furthermore, that persistence and overall performance were correlated, that 'healthy' variability only exists within a limited range, and other individual differences related to ability and resistance to stress or fatigue are also involved in the prediction of performance.

Author List

Guastello SJ, Reiter K, Shircel A, Timm P, Malon M, Fabisch M

Author

Stephen Guastello BA,MA,PhD Professor in the Psychology department at Marquette University

MESH terms used to index this publication - Major topics in bold

Achievement
Adult
Choice Behavior
Decision Making
Fatigue
Female
Humans
Individuality
Investments
Male
Nonlinear Dynamics
Sex Distribution
Stress, Psychological
Students
Time Factors
Workload
Young Adult