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A Neurofinance Framework for Subjective Temporal Perception, Risk, and Investment Behavior

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  • Pascal Stiefenhofer

Abstract

Neurofinance shows that financial valuation depends on evolving neural states, while temporal experience is itself state dependent. Yet intertemporal models typically treat time as exogenous and ask how delay affects valuation. This paper examines the converse question: can valuation-related neural dynamics generate subjective financial time? We develop a continuous-time model on a joint financial--neuro-evaluative state space in which subjective financial time is accumulated valuation along dynamically admissible histories. We characterise realised temporal-rate dispersion and show that, under matched financial dynamics, distinct neuro-evaluative trajectories can generate different subjective financial times. Financial equivalence therefore need not imply temporal equivalence. Valuation curvature further determines local path dependence. A proof-of-concept behavioural--fMRI analysis uses \(1{,}183\) observations, \(1{,}126\) valuation transitions, and \(798\) financially matched pairs. Using a medial-prefrontal valuation-state coordinate based on vmPFC and dmPFC responses, the strongest participant exhibits a positive association between neural-state separation and subsequent valuation divergence (\(\rho=0.253,\ p_{\mathrm{perm}}=0.001\)), robust to residual financial distance (\(\rho=0.251\)) and tighter matching (\(\rho=0.207\)). Participant effects are heterogeneous, although combined evidence gives \(p=0.0216\). The data support the neural state-separation premise rather than directly identifying subjective financial time. The framework establishes a theoretical and empirically grounded basis for endogenous subjective time in neurofinance. \keywords{Neurofinance $\cdot$ Subjective financial time $\cdot$ Neural valuation $\cdot$ Relative subjective value $\cdot$ Intertemporal choice $\cdot$ Temporal dispersion $\cdot$ Path dependence

Suggested Citation

  • Pascal Stiefenhofer, 2026. "A Neurofinance Framework for Subjective Temporal Perception, Risk, and Investment Behavior," Papers 2608.14930, arXiv.org.
  • Handle: RePEc:arx:papers:2608.14930
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