Psychology influences markets, research confirms
Monday, July 1, 2013 - 14:30
in Psychology & Sociology
When it comes to economics versus psychology, score one for psychology. Economists argue that markets usually reflect rational behavior—that is, the dominant players in a market, such as the hedge-fund managers who make billions of dollars' worth of trades, almost always make well-informed and objective decisions. Psychologists, on the other hand, say that markets are not immune from human irrationality, whether that irrationality is due to optimism, fear, greed, or other forces.