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dc.contributor.authorTuckett, Daviden_US
dc.date.accessioned2009-12-07en_US
dc.date.accessioned2009-12-08T15:27:58Z-
dc.date.available2009-12-08T15:27:58Z-
dc.date.issued2009en_US
dc.identifier.citationEconomics: The Open-Access, Open-Assessment E-Journal 3 2009-40 1-22 doi:10.5018/economics-ejournal.ja.2009-40en_US
dc.identifier.pidoi:10.5018/economics-ejournal.ja.2009-40-
dc.identifier.urihttp://hdl.handle.net/10419/28954-
dc.description.abstractThe author suggests that the 2008 financial crisis was the culmination of an accelerating and inherently unstable process of financial market evolution. He argues that markets are not well organized to manage the power that financial assets have to generate emotion and their wider effect on human imagination and judgement, anchored in neurobiology. Judgements and decisions about risk, reward and the evaluation of success can become systematically compromised because the excitement of potential gain is disconnected from anxiety about potential consequences, producing groupthink and bubbles. When anxiety breaks through, a catastrophic loss of confidence is inevitable. In the aftermath the emotional pain that would be involved in accepting responsibility stands in the way of lessons being learned. The author's theoretical framework is influenced by modern psychoanalysis and draws on an interview study of international fund managers in 2007. He suggests that underlying psychological conflicts have influenced the way market institutions have evolved to compete by selling the promise of exceptional performance. To cope with the expectations upon them, agents are impelled to base their actions on stories which overvalue opportunities and underestimate risks; this creates agency issues and facilitates the process of disconnecting anxiety from excitement that creates bubble potential. Policy implications go well beyond improving regulation and transparency.en_US
dc.language.isoengen_US
dc.publisherKiel Institute for the World Economy (IfW) Kielen_US
dc.relation.ispartofseriesEconomics 2009-40en_US
dc.subject.jelG01en_US
dc.subject.jelG18en_US
dc.subject.jelG28en_US
dc.subject.ddc330en_US
dc.subject.keywordFinancial bubblesen_US
dc.subject.keywordfinancial crisesen_US
dc.subject.keywordgroup functioningen_US
dc.subject.keywordgroupthinken_US
dc.subject.keywordmarket instabilityen_US
dc.subject.keywordfinancial regulationen_US
dc.subject.keywordpsychoanalysisen_US
dc.subject.keywordpsychologyen_US
dc.subject.stwFinanzmarktkriseen_US
dc.subject.stwAnlageverhaltenen_US
dc.subject.stwFinanzmarkten_US
dc.subject.stwBubblesen_US
dc.subject.stwSozialpsychologieen_US
dc.subject.stwErwartungstheorieen_US
dc.subject.stwRegulierungen_US
dc.subject.stwWelten_US
dc.titleAddressing the psychology of financial marketsen_US
dc.typeArticleen_US
dc.identifier.ppn614388287en_US
dc.identifier.urlhttp://www.economics-ejournal.org/economics/journalarticles/2009-40en_US
dc.rights.licensehttp://creativecommons.org/licenses/by-nc/2.0/de/deed.en-
dc.identifier.repecRePEc:zbw:ifweej:200940-
Appears in Collections:Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles

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