working memory, anxiety, and e*trade mobile pro

7/30/2019 Working Memory, Anxiety, and E*TRADE MOBILE PRO

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Running Head: WORKING MEMORY AND E*TRADE MOBILE PRO

Working Memory, Anxiety, and E*TRADE MOBILE PRO

Armen J. Chakmakjian

Bentley University


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WORKING MEMORY AND E*TRADE MOBILE PRO

Abstract

Trading investment vehicles such as stocks and bonds has moved from paper-based

research and voice over landline phone to the mobile smart device. This disintermediation of

information retrieval and transaction execution has created the ability for the average consumer to

act on their investments with increasing ease and speed. This paper studies the working memory

load that is required to act on the goals of an investor using the iPad application called E*TRADE

MOBILE PRO. This paper first describes working memory in relation to the other perceptual and

cognitive functions. Aspects of working memory such as the visual and phonological loops, as

well as the concept of the central executive and episodic buffer are touched upon. The research

then attempts to intuit the ease or difficulty that a novice investor encounters when using the iPad

application to perform research and to execute a trade. Each action is evaluated in the context of

working memory looking for areas where working memory capacity and emotional load would

exacerbate pre-existing anxiety or create it. The paper concludes that the application is powerful

but creates a high cognitive load on a novice investor and possibly exacerbates any anxiety they

may already have.


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Working Memory and E*TRADE MOBILE PRO

Trading investment vehicles such as stocks and bonds has moved from paper-based

research and voice over landline phone to the mobile smart device. This disintermediation of

information retrieval and transaction execution has created the ability for the average consumer to

act on their investments with increasing ease and speed. This paper studies the working memory

load that is required to act on the goals of an investor using the iPad application called E*TRADE

MOBILE PRO. In order to perform a complex set of actions such as trading equity shares based

on research, an investor relies on the perceptual and cognitive capabilities that have evolved in

humans. In particular, an investor uses working memory to make decisions and execute against

their goal of buying or selling shares. Applications such as the E*TRADE app present an

interesting cognitive and emotional load on an investor, especially to novice investors who are

presented with all the tools and information in one place.

This paper first describes working memory in relation to the other perceptual and

cognitive functions. Aspects of working memory such as the visual and phonological loops, as

well as the concept of the central executive and episodic buffer are touched upon. The research

then attempts to intuit the ease or difficulty for a novice investor presented with the iPad

application to perform research and to execute a trade. Each action is evaluated in the context of

working memory looking for areas where working memory capacity and emotional load would

exacerbate pre-existing anxiety or create it. The paper concludes that the application is powerful

but creates a high cognitive load on a novice investor and possibly exacerbates any anxiety they

may already have.

Working Memory

Baddeleys described his working memory model in 1974. In that model working

memory sits between sensory memory and long-term memory. Baddeley proposes a limited

capacity work space which has two components, storage and processing. (Baddeley & Hitch,

1974) Within that description Baddeley posits that there is also a visual sketchpad and a

phonological loop that interact through a central executive. (Baddeley, 2000) Neurological

research has shown the central executive function in action. When two tasks were attempted at

the same time, different parts of the brain (depending on task) were activated in order to help with

Figure 1: Baddeley's model of working memory (Baddeley, 2000)


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the processing whereas those same parts of the brain were not activated when only one task was

attempted. (DEsposito, Detre, Alsop, Shin et al., 1995) The fact that the brain activates other

parts of the brain as a part of load balancing means that the brain is somehow manipulating

limited resources. Research indicates that there is a trade-off between the amount of storage

required and the speed of processing and also shows that slow or error-prone processing tends to

use up resources otherwise available for tasks. (Baddeley & Hitch, 1986, Just & Carpenter, 1992)

Baddeley proposes that there is an episodic component to working memory that works

along with the visual and phonological and central executive. (Figure 1) It is described as a

limited-capacity cache that integrates information from various sources. The episodic buffer is

controlled by the central executive to exchange information in both directions with long-term

memory as a part of keeping track of the execution progress of plans against goals. (Baddeley,

2000, Conway, 2001) Mental models, also known as cognitive chunks, play a role in this episodic

processing. The episodic buffer is where cognitive chunks are formed or modified and can be

recalled into working memory later for attentive processing. (Jeffries, Lambon Ralph &

Baddeley, 2004, Rapp, 2005)

Working memory is constrained by the fact that it is a limited resource and not

everything perceived and processed is stored. Research has indicated that visual working memory

stores integrated objects, where both color and orientation are stored, in a limited fashion. This

research showed that up to 4 colors were stored for an object even if the object was more colorful.

(Luck & Vogel, 1997) Other research shows that children rely primarily on visual working

memory to process, but adolescents and adults seem to dual-encode visual and phonological

information, and in fact rely on phonological recall more. (Hitch, Woodin & Baker, 1989)

However, external issues may also hamper working memory functioning. A 2006 study

showed that anxiety selectively disrupts the visuospatial loop in particular, while leaving the

phonological loop untouched. (Shackman et al., 2006). The visuospatial loop is tied to math

ability and studies show that test performance, a specific use of working memory, is inhibited by

stereotype threat and math anxiety in general. (Ashcraft & Kirk, 2001, Schmader & Johns, 2003).

Research shows that financial decision-making puts a significant load on working memory and

specifically on prefrontal systems. Spinella, et al., show that the affect by any impairment in the

frontal lobes may subject the individual to impulsivity and poor judgment and in particular with

regards to purchasing and credit card debt. That impulsivity results anxiety and other health

problems in the decision-maker. (Spinella, Yang & Lester, 2004, 2007). Anxiety in turn can

constrain working memory by biasing the attentive response to an apparent source of a threat

(Luu, Tucker & Derryberry, 1998). It is not difficult to extrapolate that the purchase of a stock

may then be using the same brain circuitry, subject the decision to inherent impulsivity as well as

being affected by anxiety.


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E*TRADE MOBILE PRO, Anxiety and Working Memory

Figure 2 shows the entry point into the E*TRADE MOBILE PRO application for any

user. For the purposes of this discussion we will be looking at the application from the point of

view of a novice investor, with no frontal lobe impairment, who may be familiarizing themselves

with stock trading. This research does not speculate how the user invested prior to the use of this

application. The iPad application presents the user with rich visual perceptual information in the

form of colors and shapes. The users preattentive mechanism will begin to process the page by

grouping objects for processing priming later functioning with information that pops out. The

users attention may be drawn to the familiar television-like metaphor for CNBC streaming video

and a graph of some major investing indexes. From a working memory point of view, the user

may have one of two goals. They may either want to browse this screen to become familiar with

it or try an action. They may be drawn to the large blue selection indicator for the articles. At theedges of the visual field they will also see what appear to be occluded sections of information.

Assuming that they are familiar with swiping on an iPad, they will swipe right or left to expose

more information. While some of this data is potentially interesting, the user will process the

generic nature of the information presented and conclude that it is not specific to them. To some

extent this may be distracting if their goal is to get to their own information.

Search for Personal Information

The user will probably attempt want to authenticate their session at this point. They will

search the visual field for any indication that they can log in. At the bottom left they may notice akey, a familiar metaphor for unlocking something, and the words Log on. The combination of

text and the icon will create a powerful pair of inputs to working memory in the visual loop.

Research studies that even though this text is presented visually, familiarity with words uses both

the visual and phonological loops through the process of subvocalization in silent reading.

(Daneman & Newson, 1992). The icon and text pair takes advantage of both the visual/spatial

loop and phonological loop pairing words and icons.

Figure 2:ETRADE application on an iPad on initial invocation


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The user will authenticate using the username and password that they previously set up,

which they stored electronically (such as in an email) or written down, or just from memory.

Remembering this information or where they kept may cause some anxiety or not. When

successful they will be presented with what appears to be exactly the same screen. This may be a

bit disconcerting the user. With a quick scan the user will see that the key has now turned into a

lock and delayed quotes at the top changed to real time quotes. Along the bottom they see the

Accounts icon in the form of a folder. They may intuit at this point that this is where their

information is. Clicking on that icon moves things on the screen such that their portfolios and

accounts are visible including recent alerts.

Researching Financial Information

As Spinella, et al., point out, financial decision-making in healthy individuals brings with

it a cognitive load laced with the emotional results of reward and punishment. (Spinella, Yang &

Lester, 2004) That reward or punishment would be gain or loss based on an investment decision

whether executed or inhibited. At this point the user is looking at a listing of their account

information including their portfolio(s) and can see the overall value of their assets. For the

purposes of this discussion, it is assumed that a trade will have to be done with existing assets.

The user can see the overall gain for each portfolio and depending on the previous activity in this

account this screen can be filled with a significant amount of financial and mathematical

information to process, such as which portfolios have had the best or worst returns including

losses. This data will likely strobe any anxiety or euphoria based on the results of previous

actions.

If the user taps on a particular portfolio, the screen updates to show two new boxes in the

carousel at the top, one with the portfolio performance that day as well as a chart for one of the

stocks in the portfolio. This is rich visual data for an expert with the ability to consume it in large

spans or chunks. For a novice or anxious investor, the data on this screen can be overwhelming.

Kalyuga, et al., showed in their research that split-attention presentation of text and graphical data

requiring the user to relate what appears to be disparate information requires significant working

memory that may inhibit the learning process by reducing available working memory for schema

acquisition. (Kalyuga, Chandler & Sweller, 1999). In other words, the novice investor is dealing

with lots of data in small chunks that can create a high cognitive load. The user can flick the

carousel right and left and find cells for each of the investments in that portfolio as well as charts

and news tickers for markets that day. Assuming they have an investment that they need to sell in

order to have funds to buy a different investment they have in mind, they might fathom to do

research. The presented information is somewhat limited. However at the bottom of the screen

there is a research icon next to the accounts icon. The affordance is a chart, which could mean

more charts, or other information.


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Assuming for a moment that the user has zeroed in on the data that convinces them that

they should sell a stock that has done well for them, they might want to investigate a stock that

they do not own but for which they have some previous information from. They must now figure

out how to get information about that hunch or stock tip that validates or disproves it. The

ETRADE program doesnt provide a search function for information on a stock, but it does

provide a Get Quotes box at the bottom. The user will type in a stock name or ticker in that cell

and the screen will update the upper and lower carousels to present information about that stock.

At the top left, a graph of the stocks performance, at the top right, immediate stock data such as

recent bid/ask prices, 52 week high and lows, and the current price. The lower carousel has news

stories relevant to that stock. Again this is a lot of rich information to consume and process along

the whole perceptual and cognitive systems.

Possible Confirmation Bias

To some extent, because the user is dealing with an emotional topic such as a financial

transaction, they may also be subject to confirmation bias. In this particular case, the amount of

cognitive load, combined with any existing anxiety, may cause a user to make a decision based on

the data provided that confirms their hunch or the tip they were provided. One research study

shows that selective exposure to information that is presented in a sequential fashion may lead to

confirmation bias. (Jonas, Schulz-Hardt, Frey & Thelen, 2001) It can be extrapolated that in this

case the possible overload of information in ETRADE in concert with a set of articles that is

walked through sequentially might lead to a novice customer to confirm their hunch, short-

circuiting any metacognitive checking that might be brought to bear on the decision.

Executing Transactions

At this point the user has confirmed that they should trade one stock for another. In both

the sell and buy scenarios, tapping the Trading icon at the bottom of the page starts the

transaction. An overlay appears (See figure 3) which allows them to pick an order type, a stock

and several other parameters. As soon as the stock ticker symbol is typed in, the screen is updated

Figure 3: Order and Preview Overlays


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with a real time quote. Once the parameters of a transaction are entered, a green button

encourages the user to preview the transaction. On the preview screen, the user is allowed to

review the data and then possibly edit it. The researcher in this case did not execute the

transaction to buy one share of GM, but in all likelihood a similar pop-up would appear which

would confirm the order and let the user know if the order had been executed yet.

Buying and selling of equities uses the same set of affordances and is part of the same

flow. Within seconds of making the decision to execute the transaction the user would be able to

both buy and sell stocks. Of all the information presented thus far, this seemed to be the most

logical, learnable and somewhat free of confusion and load.

Summary and Conclusion

This paper first described working memory in relation to the other perceptual and

cognitive functions. It briefly touched on aspects of working memory such as the visual and

phonological loops, the central executive and the newer concept of episodic buffer. The research

then turned to the specific example of a novice investor presented with the ETRADE iPad

application and how they would perform research and then execute a trade. The conclusions

presented were that this application would create a great amount of cognitive load for the user

based on its design and the information provided. Exacerbating this would be any intrinsic

anxiety that accompanies financial transactions for a novice investor. Finally the paper concluded

that the least cognitive load and anxiety provoking part of the design application was executing

the transaction itself.


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working memory, anxiety, and e*trade mobile pro

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