Explaining panic behavior in portfolio decision-making*

Se Ho Kwak

Journal of Post Keynesian Economics, 2025, vol. 48, issue 2, 339-357

Abstract: G.L.S. Shackle was a major critic of probability based economic theory. During the 1980s and 1990s, his alternative framework of decision making was mathematically reconstructed by Katzner. In this paper, we will apply the Shackle-Katzner framework to provide two examples of financial decision-making of the individual that result in panic behavior. The selection of a portfolio containing money and a single nonmonetary asset will be considered first. Then the analysis of a portfolio with two nonmonetary assets will be discussed. Based on these findings, possible scenarios of individual panic behavior in portfolio adjustment will be examined.

Date: 2025
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DOI: 10.1080/01603477.2024.2434464

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