IDEAS home Printed from https://ideas.repec.org/a/eee/dyncon/v36y2012i8p1077-1087.html
   My bibliography  Save this article

Financial markets are markets in stories: Some possible advantages of using interviews to supplement existing economic data sources

Author

Listed:
  • Tuckett, David

Abstract

Fifty-two research interviews were conducted with money managers controlling over $500 billion. This paper presents detailed material from one interview to argue interviews usefully describe their shared reality and provide information about the conditions of action facing financial decision-makers with implications for aggregate behaviour. Their shared reality was dominated by “radical” uncertainty and information ambiguity which severely limited the scope for “fully rational” decision-making. How they managed to commit to decisions was by creating narratives. The study suggests it may be useful to reconsider prejudices against the usefulness of talking to individual economic agents about what they actually do.

Suggested Citation

  • Tuckett, David, 2012. "Financial markets are markets in stories: Some possible advantages of using interviews to supplement existing economic data sources," Journal of Economic Dynamics and Control, Elsevier, vol. 36(8), pages 1077-1087.
    • Handle: RePEc:eee:dyncon:v:36:y:2012:i:8:p:1077-1087
    DOI: 10.1016/j.jedc.2012.03.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165188912000851
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jedc.2012.03.013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Riccardo Rebonato, 2007. "Introduction to Plight of the Fortune Tellers: Why We Need to Manage Financial Risk Differently," Introductory Chapters, in: Plight of the Fortune Tellers: Why We Need to Manage Financial Risk Differently, Princeton University Press.
    2. Heber Farnsworth & Jonathan Taylor, 2006. "Evidence On The Compensation Of Portfolio Managers," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 29(3), pages 305-324, September.
    3. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    4. Bewley, Truman F., 1998. "Why not cut pay?," European Economic Review, Elsevier, vol. 42(3-5), pages 459-490, May.
    5. Tuckett, David, 2009. "Addressing the psychology of financial markets," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-22.
    6. David Tuckett, 2011. "Minding the Markets," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-30782-7, December.
    7. Gordon J. Alexander & Gjergji Cici & Scott Gibson, 2007. "Does Motivation Matter When Assessing Trade Performance? An Analysis of Mutual Funds," The Review of Financial Studies, Society for Financial Studies, vol. 20(1), pages 125-150, January.
    8. Tuckett, David, 2009. "Addressing the psychology of financial markets," Economics Discussion Papers 2009-37, Kiel Institute for the World Economy (IfW Kiel).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wendy Carlin & David Soskice, 2018. "Stagnant productivity and low unemployment: stuck in a Keynesian equilibrium," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 34(1-2), pages 169-194.
    2. Adam Butt & M. Scott Donald & F. Douglas Foster & Susan Thorp & Geoffrey J. Warren & Tom Smith, 2017. "Design of MySuper default funds: influences and outcomes," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(1), pages 47-85, March.
    3. Daphne Sobolev & Bryan Chan & Nigel Harvey, 2017. "Buy, sell, or hold? A sense-making account of factors influencing trading decisions," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1295618-129, January.
    4. Butt, Adam & Donald, M. Scott & Foster, F. Douglas & Thorp, Susan & Warren, Geoffrey J., 2018. "One size fits all? Tailoring retirement plan defaults," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 546-566.
    5. Forbes, William, 2024. "Unconscious thoughts as a spur and halt on good financial decisioning making," International Review of Financial Analysis, Elsevier, vol. 91(C).
    6. Arpan Chakraborty, 2024. "Beyond Rationality: Unveiling the Role of Animal Spirits and Inflation Extrapolation in Central Bank Communication of the US," Papers 2409.10938, arXiv.org.
    7. Bianchi, Marina, 2014. "The magic of storytelling: How curiosity and aesthetic preferences work," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-30.
    8. Johnson, Samuel G. B., 2019. "Toward a cognitive science of markets: Economic agents as sense-makers," Economics Discussion Papers 2019-10, Kiel Institute for the World Economy (IfW Kiel).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anne van Aaken & Janis Antonovics & Andreas Glöckner, 2016. "Psychology and Disaster: Why We Do Not See Looming Disasters and How Our Way of Thinking Causes Them," Global Policy, London School of Economics and Political Science, vol. 7, pages 16-24, May.
    2. Dow Alexander & Dow Sheila C., 2011. "Animal Spirits Revisited," Capitalism and Society, De Gruyter, vol. 6(2), pages 1-25, December.
    3. Nofsinger, John R., 2012. "Household behavior and boom/bust cycles," Journal of Financial Stability, Elsevier, vol. 8(3), pages 161-173.
    4. Thomas D. Willett, 2012. "The role of defective mental models in generating the global financial crisis," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 4(1), pages 41-57, April.
    5. Aren Selim & Hamamci Hatice Nayman, 2023. "Mediating Effect of Pleasure-Seeking and Loss Aversion in the Relationship Between Phantasy and Financial Risk Tolerance and the Moderating Role of Confidence," Folia Oeconomica Stetinensia, Sciendo, vol. 23(2), pages 24-44, December.
    6. Emmanuel Laffort & Nicolas Dufour, 2019. "Fraud phenomenon seen from Luhmann's systemic perspective," Working Papers hal-02010162, HAL.
    7. Bormann, Sven-Kristjan, 2013. "Sentiment indices on financial markets: What do they measure?," Economics Discussion Papers 2013-58, Kiel Institute for the World Economy (IfW Kiel).
    8. Nyman, Rickard & Kapadia, Sujit & Tuckett, David, 2021. "News and narratives in financial systems: Exploiting big data for systemic risk assessment," Journal of Economic Dynamics and Control, Elsevier, vol. 127(C).
    9. Ali Kabiri & Harold James & John Landon-Lane & David Tuckett & Rickard Nyman, 2020. "The Role of Sentiment in the Economy: 1920 to 1934," CESifo Working Paper Series 8336, CESifo.
    10. Lee, Seohyun, 2017. "Three essays on uncertainty: real and financial effects of uncertainty shocks," MPRA Paper 83617, University Library of Munich, Germany.
    11. Osina, Nataliia, 2019. "Global liquidity, market sentiment, and financial stability indices," Journal of Multinational Financial Management, Elsevier, vol. 52.
    12. Brooks, Chris & Fenton, Evelyn & Schopohl, Lisa & Walker, James, 2019. "Why does research in finance have so little impact?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 58(C), pages 24-52.
    13. Pedersen, Michael, 2019. "Anomalies in macroeconomic prediction errors–evidence from Chilean private forecasters," International Journal of Forecasting, Elsevier, vol. 35(3), pages 1100-1107.
    14. Lennart Erixon & Louise Johannesson, 2015. "Is the psychology of high profits detrimental to industrial renewal? Experimental evidence for the theory of transformation pressure," Journal of Evolutionary Economics, Springer, vol. 25(2), pages 475-511, April.
    15. Ana María Iregui & Ligia Alba Melo & María Teresa Ramírez, 2009. "Formación e incrementos de salarios en Colombia: Un estudio microeconómico a partir de una encuesta a nivel de firma," Borradores de Economia 582, Banco de la Republica de Colombia.
    16. Michelle Baddeley, 2017. "Keynes’ psychology and behavioural macroeconomics: Theory and policy," The Economic and Labour Relations Review, , vol. 28(2), pages 177-196, June.
    17. Muhammad Irfan & Raima Adeel & Muhammad Shaukat Malik, 2023. "The Impact of Emotional Finance, and Market Knowledge and Investor Protection on Investment Performance in Stock and Real Estate Markets," SAGE Open, , vol. 13(4), pages 21582440231, November.
    18. Riya Arora & Madhumathi Rajendran, 2023. "Moored Minds: An Experimental Insight into the Impact of the Anchoring and Disposition Effect on Portfolio Performance," JRFM, MDPI, vol. 16(8), pages 1-22, July.
    19. Stefanescu, Razvan & Dumitriu, Ramona, 2016. "Particularitǎţi ale evoluţiei variabilelor financiare [Some particularities of the financial variables evolution]," MPRA Paper 73481, University Library of Munich, Germany, revised 02 Sep 2016.
    20. Bronk, Richard, 2013. "Hayek on the wisdom of prices: a reassessment," LSE Research Online Documents on Economics 50371, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Financial markets; Interviews; Economic methodology; Narrative; Uncertainty;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • G1 - Financial Economics - - General Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:36:y:2012:i:8:p:1077-1087. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jedc .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.