Hirshleifer, David (2007): Psychological Bias as a Driver of Financial Regulation.
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I propose here the psychological attraction theory of financial regulation—that regulation is the result of psychological biases on the part of political participants—voters, politicians, bureaucrats, and media commentators; and of regulatory ideologies that exploit these biases. Some key elements of the psychological attraction approach are: salience and vividness, omission bias, scapegoating and xenophobia, fairness and reciprocity norms, overconfidence, and mood effects. This approach further emphasizes emergent effects that arise from the interactions of individuals with psychological biases. For example, availability cascades and ideological replicators have powerful effects on regulatory outcomes.
|Item Type:||MPRA Paper|
|Institution:||Merage School of Business, University of California Irvine|
|Original Title:||Psychological Bias as a Driver of Financial Regulation|
|Keywords:||Investor psychology; regulation; salience; omission bias; scapegoating; xenophobia; fairness; reciprocity; norms; mood; availability cascades; overconfidence; evolutionary psychology; memes; ideology; replicators|
|Subjects:||G - Financial Economics > G0 - General
H - Public Economics > H0 - General
H - Public Economics > H1 - Structure and Scope of Government > H10 - General
G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
|Depositing User:||David Hirshleifer|
|Date Deposited:||03. Oct 2007|
|Last Modified:||12. Feb 2013 12:13|
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