Locus of Control, Gambler’s Bias, Vicarious Learning and Emotional Self-Regulation: An Emotional Reading of Financial Decision-Making.

This paper analyzes the cognitive and emotional trajectory of novice traders in a scalping trading simulation (holding time of less than a quarter of an hour). Using a qualitative approach based on semi-structured interviews, the study highlights a recurring process marked by three phases: initial enthusiasm, growing frustration and final resignation. Four psychological mechanisms appear to be central to this dynamic. The locus of control gradually shifts from internal to external: initially confident in their knowledge, participants come to attribute their failures to chance or market conditions, which undermines their commitment and amplifies a sense of powerlessness. Next, the gambler’s bias manifests itself in an irrational persistence in action, due to frustration, boredom and the illusory hope of a turnaround. In addition, vicarious learning, initially a source of reassurance through social comparison, becomes a vector of negative emotional contagion, promoting collective resignation. Finally, it highlights that emotional self-regulation and coping strategies play a central role in how novice traders attempt to deal with the emotional pressure. The analysis shows that these four mechanisms interact in a cumulative and circular dynamic: the shift to an external locus of control weakens confidence, which reinforces the gambler’s bias, while emotional contagion accelerates resignation and a lack of emotional regulation. This process, similar to the learned helplessness model, highlights the central role of emotions and social interactions in financial decision making. On a theoretical level, the study contributes to conclusions drawn from behavioral finance by proposing a dynamic interpretation of four psychological phenomena, which can be considered as emotional and social trajectories. It also highlights the importance of integrating emotion management and reflexivity into technical knowledge in financial education programs. [ABSTRACT FROM AUTHOR]