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Agent Behaviour, Financial Market and Welfare Theory

Bernard Paranque (), Walter Baets and Henry Pruden
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Walter Baets: Euromed Marseille Ecole de Management
Henry Pruden: Euromed Marseille Ecole de Management

Finance from University Library of Munich, Germany

Abstract: An important literature has pointed out the coordination problems faced by the agents, in particular the financial one when they have to manage risk and their portfolio. If we follow Kaldor and its definition of speculation, then we could point out that in this case agents are short term oriented because they have to face to an uncertain reality: uncertainty about the behaviour of their competitors at present time and in the future, and uncertainty about the future reality which will be built by their own decision and action. Then each agent tries to anticipate the behaviour of the others, on one hand to do the same (then in average it is a way to avoid lost), on another hand to try to find an opportunity which has not been seen by the other (the way to earn money, doing what the other can’t or may not do), that means mimetic versus opportunism (or free rider behaviour). In both case, we have a kind of reproduction of habits without any collective perspective. The latent hypothesis is that individual decision produces the people satisfaction, the social welfare. We thinks there are three reasons to disagree with this hypothesis ( cancelling that it does not work in reality): a lack of specific tool allowing us to anticipate change and communicate about it; a lack of understanding “what is the common reality”; a lack of an agreement on “what and how can we do together”. That means that we need to understand that rules are not a constraint like they could be in the contract theory but more a through out line to help us to coordinate a collective action

Keywords: Financial behaviour; holism; agent; financial market; social welfare; value maximization; stakeholder (search for similar items in EconPapers)
JEL-codes: C61 D6 D82 E44 G14 G30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-fin, nep-mac and nep-pke
Date: 2005-08-01, Revised 2005-08-02
Note: Type of Document - pdf; pages: 9. Presented at the 4th Global Conference on Business & Economics, Sponsored by Association for Business & Economic Research and International Journal of Busines s & Economics - June 26-28, 2005 - Oxford University, Oxford, UK
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