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Updated: Jan 24, 2026

Combined Transcranial Magnetic Stimulation and Electroencephalography of the Dorsolateral Prefrontal Cortex
Published on: August 17, 2018
Stimulating the Dorsolateral Prefrontal Cortex Decreases the Asset Bubble: A tDCS Study
Xuejun Jin1, Cheng Chen1, Xue Zhou1
1College of Economics, Zhejiang University, Hangzhou, China.
This study used transcranial direct current stimulation (tDCS) to show the dorsolateral prefrontal cortex (DLPFC) causally influences asset bubbles. Modulating the DLPFC reduced bubble size and improved cognitive function.
Area of Science:
- Neuroeconomics
- Cognitive Neuroscience
- Behavioral Finance
Background:
- The neural underpinnings of asset bubbles are increasingly studied.
- The dorsolateral prefrontal cortex (DLPFC) is implicated in bubble formation, but causality and mechanisms are unclear.
Purpose of the Study:
- To investigate the causal role of the DLPFC in asset bubble formation.
- To explore the cognitive mechanisms linking DLPFC activity to bubble dynamics using transcranial direct current stimulation (tDCS).
Main Methods:
- 126 subjects participated in a learning-to-forecast experiment.
- tDCS was applied to modulate DLPFC activity (left anodal/right cathodal, right anodal/left cathodal, or sham).
- A 2-back task assessed cognitive changes pre- and post-stimulation.
Main Results:
- Left anodal/right cathodal DLPFC stimulation significantly reduced asset bubble size compared to sham.
- This stimulation group also showed improved performance on the 2-back task, suggesting enhanced cognitive abilities.
- Individuals in the stimulated group adopted adaptive learning rules, unlike the trend-following rules in control groups.
Conclusions:
- DLPFC activity causally influences asset bubble formation.
- Cognitive enhancements, particularly adaptive learning, mediate the effect of DLPFC stimulation on financial decision-making.
- Targeting the DLPFC may offer insights into mitigating market volatility.
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