Scopic systems and decision making in financial markets

2020 ◽  
pp. 262-276
Author(s):  
Alex Preda ◽  
Roland Gemayel
Keyword(s):  
Decision Making ◽  
Financial Markets

Modern Financial Market Theory – A Critique Based on the Logic of Human Action

2021 ◽  
Vol 54 (3) ◽  
pp. 447-467
Author(s):  
Thorsten Polleit
Keyword(s):  
Decision Making ◽  
Financial Markets ◽  
Financial Market ◽  
Real World ◽  
Rational Expectation ◽  
Efficient Market Hypothesis ◽  
Human Action ◽  
Market Theory ◽  
Expectation Theory ◽  
Market Economics

The modern financial market theory (MFMT) – based on the efficient market hypothesis, rational expectation theory, and modern portfolio theory – has become the standard approach in financial market economics. In this article, the MFMT will be critically ­reviewed using the logic of human action (or: praxeology) as an epistemological meta­theory. It will be shown that the MFMT exhibits (praxeo-)logical deficiencies so that it cannot provide investors with well-founded decision-making support in real-world financial markets.

More than money: exploring the role of investment advisors for sustainable investing

2015 ◽  
Vol 1 (1) ◽  
pp. 195-223 ◽  
Author(s):  
Falko Paetzold ◽  
Timo Busch ◽  
Marc Chesney
Keyword(s):  
Decision Making ◽  
Social Responsibility ◽  
Financial Markets ◽  
Ordinary Least Squares ◽  
Capital Allocation ◽  
Future Research ◽  
Financial Return ◽  
Content Type ◽  
Private Investors

Purpose – Investment advisors play a significant role in financial markets, yet the determinants of their behavior have not been explored in detail. The purpose of this paper is to explore the determinants of how actively advisors communicate about sustainable investing with their clients, and differences in the preferences of advisors compared to investors. Design/methodology/approach – Based on a survey with 296 retail and private banking investment advisors, this study employs an ordinary least squares regression model to explore the determinants of advisors activity in communicating about sustainable investing (SI) with their clients, differences in the aspects that matter to advisors and investors, and the role of the complexity of sustainability. Findings – Advisors activity in communicating about SI relates to their expectation of SI regarding financial return, real-world impact, and the fuzziness and trustworthiness of SI. Advisors appear not to be influenced by expected risk and their personal values, which runs against prior research findings and the interest of investors. Research limitations/implications – Future research should assess cultural differences and explore asymmetries between advisors and investors in regard to the role of volatility, values, impact measurement, and complexity. Practical implications – Investment advisors underweighting aspects related to risk and self-transcendent values relative to their clients might limit the suitability of clients ' portfolios, skew capital allocation, and depress the role of SI in financial markets. Generalized to salespeople this behavior might depress the market success of products related to sustainability at large. Social implications – The findings and their generalization indicate that salespeople might systematically deviate from their clients’ interests in regard to social responsibility. Advisors and salespeople in their mediating role might be an important barrier to sustainable development. Originality/value – This is the first quantitative study that explores the decision-making by investment advisors in the context of SI, and as such answers to specific calls in literature to explore the micro-foundations of decision making in regard to SI and social responsibility, and on the relationship between private investors and investment advisors. This study is based on unique and original empirical data on advisors that work with retail and wealthy private investors.

scholarly journals Three Different Ways Synchronization can Cause Contagion in Financial Markets

2018 ◽  
Author(s):  
Jorgen Vitting Andersen ◽  
Naji Masaad
Keyword(s):  
Decision Making ◽  
Financial Markets ◽  
Financial Market ◽  
Change Blindness ◽  
Market Performance ◽  
Large Change ◽  
Trading Strategies ◽  
Fire Dynamics ◽  
Integrate And Fire ◽  
Human Decision

We introduce tools to capture the dynamics of three different pathways, in which the synchronization of human decision making could lead to turbulent periods and contagion phenomena in financial markets. The first pathway is caused when stock market indices, seen as a set of coupled integrate-and-fire oscillators, synchronize in frequency. The integrate-and-fire dynamics happens due to "change blindness", a trait in human decision making where people have the tendency to ignore small changes, but take action when a large change happens. The second pathway happens due to feedback mechanisms between market performance and the use of certain (decoupled) trading strategies. The third pathway occurs through the effects of communication and its impact on human decision making. A model is introduced in which financial market performance has an impact on decision making through communication between people. Conversely, the sentiment created via communication has an impact on financial market performance.

scholarly journals AN EXPLORATORY RESEARCH ON THE PSYCHOLOGY OF INVESTORS IN FINANCIAL MARKETS

2020 ◽  
Vol 8 (4) ◽  
pp. 979-992
Author(s):  
Mustafa Hakan SALDI
Keyword(s):  
Decision Making ◽  
Financial Markets ◽  
Research Question ◽  
Endocrine System ◽  
Human Mind ◽  
Exploratory Research ◽  
Human Beings ◽  
Risky Assets ◽  
Main Research ◽  
The Relationship

The emotional mind which was granted to human beings in order to add the meaning of their perception through the data, information and knowledge that are being gathered from all around the outside environment with senses and the experiences of realities that have effects on the attitude of a person which can be observed as stereotypes, have effects on the decision making processes of investors, which was proven with general assumptions and theories with countless times in the background of the subject. Differently, this research is mainly designed for in-depth investigation of the relationship between parts of the human brain and endocrine system which have a role on emotional actions that can be observed of investors' behaviours in financial markets. From the viewpoint of experimentally tested studies, the discovery of the response of the subproblems will be explored in the main research question of why the risky assets are being selected by the investors relative to the sciences of neurology and endocrinology. Also, the amygdala, testosterone and cortisol relation which is the predictive factor of behaviours is going to be explained in terms of showing their effects on decision making in monetary management and will be analysed as a moderator with depth observations to understand the relationship between investment behaviour and emotions as well. As a result, the study will bring different perspectives to investors who are both experienced and inexperienced in trading with financial instruments by the addition of consideration of emotional side of the human mind to the logic and rational part.

scholarly journals Reading Keynes’s policy papers through the prism of his Treatise on Probability: information, expectations and revision of probabilities in economic policy

2021 ◽  
Author(s):  
Sylvie Rivot
Keyword(s):  
Decision Making ◽  
Probability Theory ◽  
Economic Policy ◽  
Financial Markets ◽  
The Self ◽  
The Other ◽  
Policy Recommendations ◽  
The Great Depression ◽  
The One ◽  
Probability Information

When scholars investigate the legacy of Keynes’s Treatise on Probability (1921) for the development of Keynes’s thinking, the attention usually focuses on the connections between Keynes’s probability theory, his conception of decision-making under uncertainty and the theory of the functioning of the macroeconomic system that derives from it - through the marginal efficiency of capital, the preference for liquidity and the self-referential functioning of financial markets. By contrast, the paper aims to investigate the connections between Keynes’s probability theory on the one hand, and his economic policy recommendations on the other. It concentrates on the policy recommendations defended by Keynes during the Great Depression but also after the General Theory. Keynes’s economic policy can be understood as a framework for decision-making in situations of uncertainty: fiscal policy aims to induce private agents to change their “rational” probability statements, while monetary policy aims to allow more weight to these statements.

scholarly journals Investigation of decision making support in digital trading

2020 ◽  
Author(s):  
Ilona Stalovinaitė ◽  
Nijolė Maknickienė ◽  
Raimonda Martinkutė-Kaulienė
Keyword(s):  
Neural Network ◽  
Decision Making ◽  
Financial Markets ◽  
Short Term Memory ◽  
Short Term ◽  
Learning Technique ◽  
Technical Indicator ◽  
Long Short Term Memory ◽  
Investment Portfolios ◽  
Decision Making Support

In order to trade successfully investors are looking for the best method to determine possible directions of the price changes of financial means. The main objective of this paper is to evaluate the results of digital trading using different decision-making techniques. The paper examines deep learning technique known as Long Short – Term Memory (LSTM) neural network and parabolic stop and reverse (SAR) technical indicator as possible means for decision-making support. Based on an investigation of theoretical and practical aspects of digital trading and its support possibilities, investment portfolios in real-time “IQ Option” digital trading platform were created. Short-term results show that investment portfolios created using LSTM neural network performed better compared to the ones that were created using technical analysis. The study contributes to the development of new decision-making algorithms that can be used for forecasting of the results in the financial markets.

The Paradigm Shift in Organizational Research

2012 ◽  
pp. 60-74
Author(s):  
Yanli Zhang ◽  
Yawei Wang ◽  
William Colucci ◽  
Zhongxian Wang
Keyword(s):  
Decision Making ◽  
Organizational Learning ◽  
Financial Markets ◽  
Paradigm Shift ◽  
Natural Sciences ◽  
Organizational Research ◽  
Basic Assumptions ◽  
Price Distortion ◽  
The Creation

The creation and development of theory and methods used in the study of organizations is predominantly carried out grounded in the positivist paradigm – epistemological and methodological assumptions similar to those of the natural sciences. This essay looks at the limitations of that paradigm for the study of human organizations and the benefits of relativist, humanist and post-modern assumptions, theory and methods. Limitations of the predominant paradigm are taken up by analyzing basic assumptions – objectivity, generality, empiricism, and linearity. The benefits of a more inclusive paradigm are reviewed in terms of two topic areas: Organizational learning and decision making, and financial markets and price distortion.

Psychology and Economics: Evidence from the Field. Part II: Social Preferences and Nonstandard Beliefs

2011 ◽  
pp. 56-74 ◽  
Author(s):  
S. DellaVigna
Keyword(s):  
Decision Making ◽  
Behavioral Economics ◽  
Financial Markets ◽  
Charitable Giving ◽  
Social Preferences ◽  
Previous Experience ◽  
Altruistic Behavior ◽  
Rational Decision ◽  
Rational Decision Making ◽  
Psychology And Economics

The second part of a larger work devoted to the modern behavioral economics considers nonstandard preferences that are manifest in altruistic behavior and charitable giving. The author also deals with nonstandard beliefs and shows how overconfidence, incorrect estimation of probabilities and extrapolation of previous experience produce biases in the rational decision-making, including the behavior on financial markets.

Sign in / Sign up

Export Citation Format

Share Document