INFORMATION DESIGN AS A TOOL TO REDUCE EMOTIONAL BIASES IN FINANCIAL DECISION-MAKING: A COMPARATIVE STUDY

Abstract

Introduction: Cognitive biases and emotions play a large role in financial decisions. Information design, on the other hand, has been developed to improve how information is presented, making it clearer, more usable, and delivered at the right time. This article compares and contrasts decision-making and information design. The study investigates the potential of information design to reduce the negative effects of emotional biases in financial decision-making. In order to support this study, theories on decision making (Kahneman and Tversky’s Prospect Theory) and information design (Tufte’s book on the visual display of quantitative information) are combined with recent research in behavioral finance and human-information interaction. The study also describes how a single design can function as a cognitive buffer and presents a conceptual framework for applying design to mitigate financial decision-making biases, such as loss aversion, herding, and overconfidence. The study draws on research in psychology, economics, and design studies. Objective: The objective of this study is to examine how information design can mitigate emotional and cognitive biases in financial decision-making, focusing on loss aversion, overconfidence, and herd behavior. Theoretical Framework: The research is grounded in Kahneman and Tversky’s Prospect Theory (1979), behavioral finance studies (Thaler, 2015), and information design principles from Tufte (1983, 1990, 1997), Bertin (1983), and human-information interaction frameworks (Horn, 1999; Albers, 2012). These models provide a foundation for understanding the intersection between decision-making and information environments. Method: A comparative and bibliographic strategy was adopted. Academic papers, books, and systematic reviews published between 2015 and 2026 were analyzed. Grounded Theory coding identified categories of biases and design principles, complemented by bibliometric mapping to strengthen validity. Results and Discussion: Findings show that emotional biases strongly influence investors’ decisions, especially under uncertainty. Information design, by reducing ambiguity, cognitive overload, and distortion, can act as a cognitive buffer. Case studies such as the 2008 financial crisis and cryptocurrency volatility illustrate how dashboards and clear visualizations could improve rationality in decision-making. Research Implications: The study offers practical insights for financial institutions, regulators, and designers, emphasizing transparency, trust, and stability in financial markets. Originality/Value: This research contributes by integrating behavioral finance and information design into a conceptual framework, offering innovative solutions to reduce emotional biases and enhance rational financial decisions.

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