Social Finance: Cultural Evolution, Transmission Bias and Market Dynamics

Erol Akcay and David Hirshleifer

No 27745, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The thoughts and behaviors of financial market participants depend upon adopted cultural traits, including information signals, beliefs, strategies, and folk economic models. Financial traits compete to survive in the human population, and are modified in the process of being transmitted from one agent to another. These cultural evolutionary processes shape market outcomes, which in turn feed back into the success of competing traits. This evolutionary system is studied in an emerging paradigm, social finance . In this paradigm, social transmission biases determine the evolution of financial traits in the investor population. It considers an enriched set of cultural traits, both selection on traits and mutation pressure, and market equilibrium at different frequencies. Other key ingredients of the paradigm include psychological bias, social network structure, information asymmetries, and institutional environment.

JEL-codes: D03 D15 D21 D25 D53 D8 D82 D83 D84 D85 D9 D91 D92 G02 G1 G11 G12 G14 G28 G3 G31 G32 G34 G35 G4 G41 G5 G51 G53 O31 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-cfn, nep-evo, nep-hme and nep-net
Note: AP CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Erol Akçay & David Hirshleifer, 2021. "Social finance as cultural evolution, transmission bias, and market dynamics," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 118(26), pages 2015568118-, June.

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Journal Article: Social finance as cultural evolution, transmission bias, and market dynamics (2021)
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