Date of Submission
Spring 2011
Academic Program
Economics
Advisor
Dimitri Papadimitriou
Abstract/Artist's Statement
Financial markets exist to disperse the risks of an unknown future in an economy. But for this process to work in an optimal fashion, investors – and subsequently markets – must have a way to interpret uncertainty. The investor rationality and market efficiency literature utilizes a methodology inadequate to address this fact, so I supplement it with the perspectives of epistemology, economic sociology, neuroscience, cognitive science, and philosophy of mind. This approach suggests that what is commonly viewed as market “inefficiency” is not necessarily caused by investor irrationality, but rather by the inherent nature of the epistemological problem faced by investors. I propose the Reflexive Market Hypothesis to describe how markets, despite their seeming deviations from efficiency, are efficient in the computational sense.
Distribution Options
Open Access
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Recommended Citation
Pikelny, Steven, "Reflexivity in Financial Markets: A Neuroeconomic Examination of Uncertainty and Cognition in Financial Markets" (2011). Senior Projects Spring 2011. 4.
https://digitalcommons.bard.edu/senproj_s2011/4
This work is protected by a Creative Commons license. Any use not permitted under that license is prohibited.
Included in
Banking and Finance Law Commons, Behavioral Economics Commons, Behavioral Neurobiology Commons, Cognitive Psychology Commons, Computational Neuroscience Commons, Economic Theory Commons, Finance Commons, Finance and Financial Management Commons, Management Information Systems Commons, Social Psychology Commons, Theory, Knowledge and Science Commons