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

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  • 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
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    References listed on IDEAS

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    1. 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.
    2. Gordon J. Alexander & Gjergji Cici & Scott Gibson, 2007. "Does Motivation Matter When Assessing Trade Performance? An Analysis of Mutual Funds," Review of Financial Studies, Society for Financial Studies, vol. 20(1), pages 125-150, January.
    3. 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.
    4. 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.
    5. Tuckett, David, 2009. "Addressing the psychology of financial markets," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 3, pages 1-22.
    6. Tuckett, David, 2009. "Addressing the psychology of financial markets," Economics Discussion Papers 2009-37, Kiel Institute for the World Economy (IfW).
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    Cited by:

    1. repec:eee:jeborg:v:145:y:2018:i:c:p:546-566 is not listed on IDEAS
    2. repec:bla:acctfi:v:57:y:2017:i:1:p:47-85 is not listed on IDEAS
    3. repec:taf:oaefxx:v:5:y:2017:i:1:p:1295618 is not listed on IDEAS

    More about this item

    Keywords

    Financial markets; Interviews; Economic methodology; Narrative; Uncertainty;

    JEL classification:

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

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