Emotion and financial markets

Psychologists and economists hold vastly different views about human behavior. Psychologists contend that economists' models bear little relation to actual behavior. This view is supported by a large body of psychological research that shows that emotional state can significantly affect decision making. ; Economists, on the other hand, argue that psychological studies have no theoretical basis and offer little empirical evidence about people's decision-making processes. The reigning financial economics paradigm-the efficient market hypothesis (EMH)-assumes that individuals make rational investment decisions using the rules of probability and statistics. A newer branch of financial economics called behavioral finance applies lessons from psychology to financial decision making, but most of these studies have focused on cognitive biases rather than emotion. ; The authors of this article argue that emotion has important, and possibly beneficial, influences on financial behavior. After defining the term emotion and describing how emotions can be categorized, the authors consider how emotions influence human behavior. The discussion focuses particularly on three aspects of emotion and financial decision making: emotional disposition and stock market pricing, the feeling of regret, and investors' emotional response to information. ; No new financial economics paradigm that incorporates behavioral influences and better models actual behavior has yet emerged to replace the EMH. Yet the authors believe that emotional behavior's influence on financial decision making should be taken into account in future research.Financial markets

Bubbles in experimental asset markets: Irrational exuberance no more

The robustness of bubbles and crashes in markets for finitely lived assets is perplexing. This paper reports the results of experimental asset markets in which participants trade two assets. In some markets, price bubbles form. In these markets, traders will pay even higher prices for the asset with lottery characteristics, i.e., a claim on a large, unlikely payoff. However, institutional design has a significant impact on deviations in prices from fundamental values, particularly for an asset with lottery characteristics. Price run-ups and crashes are moderated when traders finance purchases of the assets themselves and are allowed to short sell.Financial markets ; Risk

Download time and intent to use a web page: Working paper series--02-09

The World-Wide Web (WWW) has grown, and continues to grow, at an epic rate. Unlike applications software, which provides a structured navigation schema, the web encourages users to move frequently from page to page. In most cases, a web site has only one chance to make a favorable first impression. If a web page takes more than a few seconds to present this first impression, the user may decide to abandon or "bail out" from the current site and move to another site. The result of failure to deliver information to the user in a "reasonable" amount of time to a commercial web site is the loss of business--possibly forever. This research indicates that web page download time has both direct and antecedent effects on a user's behavioral intent to use a web page. In addition, this research indicates that traditional models used to assess behavioral intent and subsequent usage of applications software may not be useful in evaluating a user's intent to use a web page and that alternative predictive models should be evaluated

The origins of bubbles in laboratory asset markets

In twelve sessions conducted in a typical bubble-generating experimental environment, we design a pair of assets that can detect both irrationality and speculative behavior. The specific form of irrationality we investigate is probability judgment error associated with low-probability, high-payoff outcomes. Independently, we test for speculation by comparing prices of identically paying assets in multiperiod versus single-period markets. When these tests indicate the presence of probability judgment error and speculation, bubbles are more likely to occur. This finding suggests that both factors are important bubble drivers.

Alternative forms of program documentation for the support of audit review: An experimental investigation of usability: Working paper series--02-06

Auditors and programmers review information systems and application documentation for a number of purposes, including the evaluation and maintenance of controls. Information systems documentation may include application flowcharts, systems flowcharts, logic diagrams, etc. The same coded application procedure can be represented in the application documentation in different ways. Prior research suggests that the form of the documentation may affect the ability of auditors and programmers to efficiently and effectively review the documentation. This study reports an experiment that investigates the effect of alternate forms of documentation on the efficiency and effectiveness of the auditor and programmer's review of documentation. The review task of interest involves the auditor or programmer's identification and evaluation of control procedures within an application. The hypotheses are based upon the theory of cognitive fit which postulates that decision-making performance on a task will be enhanced when there is a cognitive fit (i.e., match) between the information emphasized in the representation and that required by the task. The results indicate that subjects using a spatial representation (flowcharts) took less time to complete the review task than the subjects using a symbolic (structured English) representation. There were, however, no differences in accuracy across the two representations. These results held for both spatial and symbolic review tasks

Peripheral Galanin Receptor 2 as a Target for the Modulation of Pain

The neuropeptide galanin is widely expressed in the nervous system and has an important role in nociception. It has been shown that galanin can facilitate and inhibit nociception in a dose-dependent manner, principally through the central nervous system, with enhanced antinociceptive actions after nerve injury. However, following nerve injury, expression of galanin within the peripheral nervous system is dramatically increased up to 120-fold. Despite this striking increase in the peripheral nervous system, few studies have investigated the role that galanin plays in modulating nociception at the primary afferent nociceptor. Here, we summarise the recent work supporting the role of peripherally expressed galanin with particular reference to the dual actions of the galanin receptor 2 in neuropathic pain highlighting this as a potential target analgesic

Fate of semi-natural grassland in England between 1960 and 2013: a test of national conservation policy

It is well documented that significant losses in semi-natural grassland occurred across Europe during the second half of the twentieth century. However, comparatively few studies have investigated and quantified the fate of large numbers of individual grassland areas. This is important for understanding the causes of decline, and consequently establishing new policies to conserve and restore lost habitats. This study addresses this problem; GIS was used to compare historic survey data collected between 1960 and 1981 with two contemporary spatial datasets of habitats in England. The datasets included the Priority Habitats Inventory 2013 and the Land Cover Map 2007 and this was undertaken for different types of semi-natural grassland across England. Considerable decreases occurred across the different grassland types, with a loss of 47% of studied semi-natural grasslands sites in England over 32–53 years. Of this, the majority of grassland was lost to conversion to agriculturally-improved grassland or arable cultivation, 45% and 43% respectively. Changes to woodland and urban areas were also evident, but on a much smaller scale. Sites receiving statutory protection as a Site of Special Scientific Interest were found to have retained more grassland (91%), compared with non-protected sites (27%), thus highlighting the effectiveness of this aspect of current conservation policy in England, and the need for this to continue in the future

Activation of the galanin receptor 2 in the periphery reverses nerve injury-induced allodynia

<p>Abstract</p> <p>Background</p> <p>Galanin is expressed at low levels in the intact sensory neurons of the dorsal root ganglia with a dramatic increase after peripheral nerve injury. The neuropeptide is also expressed in primary afferent terminals in the dorsal horn, spinal inter-neurons and in a number of brain regions known to modulate nociception. Intrathecal administration of galanin modulates sensory responses in a dose-dependent manner with inhibition at high doses. To date it is unclear which of the galanin receptors mediates the anti-nociceptive effects of the neuropeptide and whether their actions are peripherally and/or centrally mediated. In the present study we investigated the effects of direct administration into the receptive field of galanin and the galanin receptor-2/3-agonist Gal2-11 on nociceptive primary afferent mechanical responses in intact rats and mice and in the partial saphenous nerve injury (PSNI) model of neuropathic pain.</p> <p>Results</p> <p>Exogenous galanin altered the responses of mechano-nociceptive C-fibre afferents in a dose-dependent manner in both naive and nerve injured animals, with low concentrations facilitating and high concentrations markedly inhibiting mechano-nociceptor activity. Further, use of the galanin fragment Gal2-11 confirmed that the effects of galanin were mediated by activation of galanin receptor-2 (GalR2). The inhibitory effects of peripheral GalR2 activation were further supported by our demonstration that after PSNI, mechano-sensitive nociceptors in galanin over-expressing transgenic mice had significantly higher thresholds than in wild type animals, associated with a marked reduction in spontaneous neuronal firing and C-fibre barrage into the spinal cord.</p> <p>Conclusions</p> <p>These findings are consistent with the hypothesis that the high level of endogenous galanin in injured primary afferents activates peripheral GalR2, which leads to an increase in C-fibre mechanical activation thresholds and a marked reduction in evoked and ongoing nociceptive responses.</p