The Determinants of financial decisions - temporality, affect and institutional futures

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Abstract

This paper compares the views of behavioural finance with sociological accounts of decision-making in the financial arenas of the City and Wall Street. Whereas behavioural finance (with honourable exceptions) ignores the problems of uncertainty when pointing out errors and mistakes in probability which, it alleges, are caused in various ways by emotions and faulty cognitive processes within individuals, recent sociological work takes an institutional view. Moreover, in exploring the potential of a new research question, this paper suggests that uncertainty is dealt with, practically in the operational sense, by a range of ways to imagine the future. Three different time-orientations are examined in contexts such as financial firms and the Anglo-American financial field. Each one structures certain policies, products and incentive structures, and so, it is concluded, the idea that short-termism prevails (at present) is not always the case. Dangers arise just as much from past and future time-orientations, but only from these arise the possibility of precautionary measures that might better protect the public from quantitative financial products (and so on), as seen most recently in the so-called 'sub-prime' mortgage crisis.
Original languageEnglish
Title of host publicationHeterodox economic perspectives on contemporary issues
Subtitle of host publicationproceedings, refereed papers of the Sixth Australian Society of Heterodox Economists Conference, 10-11 December, 2007, The University of New South Wales, Sydney, Australia
EditorsLynne Chester, Michael Johnson
Place of PublicationSydney
PublisherSociety of Heterodox Economists
Pages262-274
Number of pages13
ISBN (Print)9780733425820
Publication statusPublished - 2007
EventAustralian Society of Heterodox Economists Conference (6th : 2007) - Sydney
Duration: 10 Dec 200711 Dec 2007

Conference

ConferenceAustralian Society of Heterodox Economists Conference (6th : 2007)
CitySydney
Period10/12/0711/12/07

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