How can behavioural finance help us in better understanding the recent global financial crisis?

The recent global financial crisis calls for a need to adopt a more interdisciplinary approach to the study of economics and finance by focussing also on the individual and social psychology that drives the actions of market participants. Behavioural finance offers such a perspective by drawing on the fields of psychology and the other social sciences to explain how investors are led to make less than rational investment decisions and how these could aggregate to less than rational market outcomes, like periods of excessive investor euphoria preceding a financial crisis. This paper draws on the existing literature in behavioural finance and particularly on the two models of information cascade by Bikchandani et al. (1992) and limits to arbitrage by De Long et al. (1990) to provide a better understanding of the underlying reasons behind the recent global financial crisis. The paper concludes with a view to inform policy of the ways it can curb speculative excesses and prevent events like the recent global financial crisis. Keywords: Investor psychology, information cascade, social contagion, limits to arbitrage, noise trader risk

How can behavioral finance help us in better understanding the recent global financial crisis?

The recent global financial crisis calls for a need to adopt a more interdisciplinary approach to the study ofeconomics and finance by focussing also on the individual and social psychology that drives the actions ofmarket participants. Behavioural finance offers such a perspective by drawing on the fields of psychologyand the other social sciences to explain how investors are led to make less than rational investmentdecisions and how these could aggregate to less than rational market outcomes, like periods of excessiveinvestor euphoria preceding a financial crisis. This paper draws on the existing literature in behaviouralfinance and particularly on the two models of “information cascade by Bikchandani et al. (1992) and“limits to arbitrage†by De Long et al. (1990) to provide a better understanding of the underlying reasonsbehind the recent global financial crisis. The paper concludes with a view to inform policy of the ways itcan curb speculative excesses and prevent events like the recent global financial crisis.Keywords: Investor psychology, information cascade, social contagion, limits to arbitrage, noise trader risk

The performative puzzle: How institutions matter in marginalizing and reconstituting identities

International audienceInstitutional arrangements, while constituting subject positions, also relegate others to inhabit unlivable abject positions. Such a perspective on identity begs the question on the possibilities of institutional reform given that abjects must seek recourse, if any, from the very institutions that marginalized them. One source for reform can be found in the functioning of institutional forums vested with performative powers, such as the Supreme Court. But how do these institutional forums legitimately bring about social transformation given that precedents bind them? To address this puzzle, we analyzed two Supreme Court rulings that showcase the performativity of institutions in materializing subject/abject positions, and the reforms that are possible. One is the 2015 US Supreme Court ruling providing marriage rights to same-sex couples. The other is the 2014 Indian Supreme Court ruling that legalized a third gender. An analysis of these two rulings and a comparison across them highlights the historical yet contingent nature of identity. The analysis also highlights “citational grafting” as a key mechanism underlying institutional reform, i.e., citations to earlier instances of social transformation serving as precedents for bringing about additional changes given new circumstances.<br/

The performative puzzle: How institutions matter in marginalizing and reconstituting identities

International audienceInstitutional arrangements, while constituting subject positions, also relegate others to inhabit unlivable abject positions. Such a perspective on identity begs the question on the possibilities of institutional reform given that abjects must seek recourse, if any, from the very institutions that marginalized them. One source for reform can be found in the functioning of institutional forums vested with performative powers, such as the Supreme Court. But how do these institutional forums legitimately bring about social transformation given that precedents bind them? To address this puzzle, we analyzed two Supreme Court rulings that showcase the performativity of institutions in materializing subject/abject positions, and the reforms that are possible. One is the 2015 US Supreme Court ruling providing marriage rights to same-sex couples. The other is the 2014 Indian Supreme Court ruling that legalized a third gender. An analysis of these two rulings and a comparison across them highlights the historical yet contingent nature of identity. The analysis also highlights “citational grafting” as a key mechanism underlying institutional reform, i.e., citations to earlier instances of social transformation serving as precedents for bringing about additional changes given new circumstances.<br/

sj-docx-1-soq-10.1177_14761270221124022 – Supplemental material for The differential categorization of novel products by institutional actors across places: The case of e-cigarettes in the US and the UK

Supplemental material, sj-docx-1-soq-10.1177_14761270221124022 for The differential categorization of novel products by institutional actors across places: The case of e-cigarettes in the US and the UK by Thinley Tharchen and Raghu Garud in Strategic Organization</p