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Lookup NU author(s): Professor Darren DuxburyORCiD
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Over recent decades, research in financial markets documents the important role of emotions in financial markets. This article reviews the results of (i) studies of correlations between market performance and proxies of emotions related (e.g., investor sentiment) or unrelated (e.g., weather) to the economy/market, (ii) field studies of investors’ emotions and investment/trading behavior observed in the market or assessed retrospectively by interviews, and (iii) experiments using emotion-inducing techniques to study the effects of emotions on simulated investment/trading behavior. We conclude that emotions normally are significant ingredients of rational decision making in financial markets but may under some circumstances cause biases.
Author(s): Gärling T, Duxbury D
Editor(s): Nikolaos Apergis
Publication type: Book Chapter
Publication status: Published
Book Title: Reference Collection in Social Sciences - Encyclopedia of Monetary Policy, Financial Markets and Banking
Year: 2023
Online publication date: 11/08/2023
Acceptance date: 06/07/2023
Publisher: Elsevier
URL: . https://doi.org/10.1016/B978-0-44-313776-1.00088-X
DOI: 10.1016/B978-0-44-313776-1.00088-X
