Perception of intentionality in investor attitudes towards financial risks

Peter Bossaerts, Shinsuke Suzuki and O’Doherty, John P.

Journal of Behavioral and Experimental Finance, 2019, vol. 23, issue C, 189-197

Abstract: Traditionally, financial market participation has been treated as analogous to playing games of chance with a physical device such as roulette. Here, we propose that humans treat financial markets as intentional agents, with own beliefs and aspirations. As a result, the capacity to infer the intentions of others, Theory of Mind, explains behaviour. As evidence, we appeal to results from recent studies of: (i) forecasting in the presence of insiders, (ii) trading in markets with bubbles, and (iii) financial contagion. Intensity of, and skill in, Theory of Mind explains heterogeneity, not only in choices but also in neural activation.

Keywords: Financial risk perception; Intentional stance; Theory of Mind; Experimental finance; Trading skills (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:23:y:2019:i:c:p:189-197

DOI: 10.1016/j.jbef.2017.12.011

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