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Emotional Finance's Blog

Emotional Finance

Lions and lion-shaped bushes in financial markets: traders’ expertise in emotion regulation

March 14, 2013 Comments (0)

Fight or flight Massai (Photo credit: Wikipedia) Imagine you are one of our hunter-gatherer ancestors, walking across the African plains. Or perhaps, in more recent times a Massai tribesman in Kenya. The grass is long in places and punctuated by small trees and bushes. You are carrying no more than a long pointed stick to protect you from dangerous predators. At quite short notice you may need to fight or run fast to the nearest tree or defensible location. Early in our evolution we developed a...

On the false contrast between rationality and emotion

March 14, 2013 Comments (0)

It is common to contrast emotions with rationality (usually in tandem with proclaiming the superiority of reason over emotion). Take for example this post on the changingminds blog. It is also the claim at the heart of Ayn Rand’s morally barren apologia for the extremes of modern capitalism, ‘Atlas Shrugged‘. In this book she claims that: “Happiness is not to be achieved at the command of emotional whims . . . Happiness is possible only to a rational man, the man who...

LIBOR, rogue traders and the supply of motivated offenders

March 14, 2013 Comments (0)

A brief trawl of media comment on the banking industry over the last few years suggests that the industry is awash with criminals and fraudsters. The picture of traders, often presented in the press, is of amoral risk-takers with bosses who are always ready to turn a blind eye if profits are being made. There has been a public parade of rogue traders from Nick Leeson to Kweku Adoboli and the LIBOR and EURIBOR scandals are setting new records in terms of the number of people implicated. So, is...

Welcome to the emotional finance blog

March 14, 2013 Comments (0)

Money fractures marriages, drives wars, inspires art, motivates some people to great achievements, leads others to despair. Fear, desire, love, hate, jealousy, anger, anxiety, relief, shame and many more shades of emotion may attach to money in the course of an ordinary day. (Photo credit: @Doug88888) Yet, economic accounts of human financial behaviour focus on reasoned weighting of information and the utility of different courses of action. Back in the mid-nineties, whilst working as a...