The frog-in-the-pan (FIP) phenomenon suggests that investors are more sensitive to abrupt price changes than gradual price changes in the stock market. Based on the cognitive-evolutionary model of surprise and the reinforcement learning model, this paper provides a new explanation for the FIP phenomenon in that this phenomenon could be explained by the elicitation of surprise emotion. We predict that when a change substantially and abruptly occurs, the significant prediction error triggers participants' surprise, which makes participants more sensitive to the change. To ascertain these hypotheses, we recruited 109 participants and compared participants' learning rates and surprise responses under different contexts. We observed that participants' learning rate soared when the prediction error was large enough to trigger surprise emotion under abruptly changed conditions and confirmed that the FIP phenomenon could be explained by the elicitation of surprise emotion. In a word, this research demonstrates the significant role of surprise emotion in the decision-making process.
Keywords: cognitive-evolutionary model of surprise; decision making; frog-in-the-pan; reinforcement learning model; surprise.