In Animal Spirits, Akerlof and Shiller define confidence as the ambiguity and uncertainty we felt towards the market, the combined confidence of many individuals then creates this restless, inconsistent element in the economy. By studying the origin of confidence, which is stories, they think fluctuations in the economy, unemployment and even market failure can be explained using the concept of confidence. They purposed that stories, particularly new era stories, that “purport to describe historic changes that will propel the economy into brand new era” (55) have significant influence in the economy. On the other hand… Although the movie Wall Street and Panic are showing stories that are slightly differing from the new era stories in Akerlof …show more content…
First of all, it is noteworthy to point out that these stories have different assumptions about human incentive and their thought process. As behavioral economists, Akerlof and Shiller believe people are driven by confidence, “when people are confident they go out and buy; when they are unconfident they withdraw, and they sell” (13), Akerlof and Shiller then further elaborate on this idea, they insist that we made certain decisions “straight from the gut” because they “feel right” (13-14). Notice this type of thought process and decision making are no different than our own instinct, thus we can conclude that confidence is simply our instinct. On the other hand, Panic and the movie Wall Street are showing a more traditional approach to microeconomic, they both indicated that the primary motivation of decision making is greed or selfishness. In the movie Wall Street, Gekko offers his words of wisdom in a Teldar stockholders meeting, he told the audience that “greed… is good. Greed is right. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed has marked the upward surge of mankind, will not only save Teldar Paper but that other malfunctioning corporation, called the U.S.A.” (Wall
Huge technological improvements and scientific breakthroughs have paved the way for larger, more stable and profitable financial markets. Fast and easy money was to be made by playing the booming stock market - many laymen took advantage of these opportunities without having a complete understanding of what exactly they were doing. This inevitably led to the crash that sent America and the world into the Great Depression. In the movie we see the first stages of the panic that spread throughout the country. People got scared and ran to the bank to take out their life savings.
Not only were millions of Americans been put out of work due to these manager’s actions, the American financial markets themselves were pushed to the brink of collapse. Despite the fact that the global financial markets, in reality, are not perfectly efficient, there is a corrective mechanism built into the day-to-day trading in the market. When prices are driven down by large sells, either by large investors or a movement in a stock, there are usually new buyers for these stocks at the cheaper price. Managers of...
It is often said that perception outweighs reality and that is often the view of the stock market. News that a certain stock may be on the rise can set off a buying spree, while a tip that one may be on decline might entice people to sell. The fact that no one really knows what is going to happen one way or the other is inconsequential. John Kenneth Galbraith uses the concept of speculation as a major theme in his book The Great Crash 1929. Galbraith’s portrayal of the market before the crash focuses largely on massive speculation of overvalued stocks which were inevitably going to topple and take the wealth of the shareholders down with it. After all, the prices could not continue to go up forever. Widespread speculation was no doubt a major player in the crash, but many other factors were in play as well. While the speculation argument has some merit, the reasons for the collapse and its lasting effects had many moving parts that cannot be explained so simply.
Fear motivates many people to act upon matters, right or wrong. This emotion has been important in many events in both works of literature, and in the real world. It has forced military geniuses into retreat, and influenced them to plan another method of attack. Fear can be both a positive and a negative acting force in one’s life, a quality that can motivate one to success as well as to downfall.
The Black Swan is a book about the importance of the unexpected. Taleb used the allegory of the Black Swan to explain how people often expect what is known and seem to forget that an unknown event can happen. The Black Swan metaphor was drawn from earlier beliefs that Black Swans don’t exist. Before the year 1697, no one has ever been reported to have seen a black swan. Consequently, people believed that all swans were white. However in 1697, a Black Swan was discovered which proved original beliefs wrong. This is the basis for Taleb’s argument. People make the mistake of believing that something will not happen because it has never happened, but when it eventually takes place it comes with disastrous consequences.
presence (Tablet I: 30-38). In addition, he emerges more divine than human (Tablet I: 50)
On an October morning, the United States woke up and realized that the stock market had crashed. Everyone was shocked and confused. The people lost most if not all of their possessions. The Great Depression was during the 1930s and made people do, think, and feel in many ways they hadn’t. They had to conserve what they had and most of the time it was nothing. They felt sad, scared, and confused in a different way. It wasn’t just the people it was the government, the police, the authority, and even the other neighboring countries of the United States. According to Maury Klein in Rainbow’s End she says, “Black Thursday, 1929. The market opened, said one broker, ‘Like a bolt out of hell.’ The dreaded tsunami of selling crashed down at once. Never had so many orders poured in so fast from so many places; 1.6 million shares changed hands in the first half hour alone and the pace never slowed. No sooner was a phone hung up than it rang again.” The rich became poor. The poor became poorer. The people with money were scared to share it thinking they might lose all of it. No one trusted anyone except themselves and their family. Money is the key to survival in this world. But during that time the people were poor. They didn’t have money, so how did they survive?
In todays world we sometimes see greed and incentives in two very different ways. This was even a problem that people thought about in the 1770’s with Adam Smith. He had many different thoughts on the two words, and how they affected human nature. Non-the less it was not just about humans but also about the economic stand point that the words showed. These two words, Greed and Incentives, lead the world wondering what they actually mean, the status of human nature, and finally the human love or for ones self interest in the free market.
Storytelling can be traced back since the birth of human beings. When it comes to entrepreneurs, storytelling is the most powerful weapon. O'Connor, E. (2002) in his article “Storytelling to be real: narrative legitimacy building and venturing”, quoted the view of Gartner (1992), that before the existence of company, it’s all about storytelling, even after the company comes into being, it’s still remain largely fiction. The most important story one will ever tell to its stakeholders or investors is one entrepreneurial story. According to (Martens & Jennings, (2007)), storytelling is being recognized as a powerful tool of entrepreneur’s. Similarly, huge
Animal Spirits – How Human Psychology Drives the Economy, And Why It Matters for Global Capitalism. ‘Animal Spirits’ is a term used by John Maynard Keynes in his renowned ‘General Theory’ to describe the psychological factors that drive consumer confidence in the economy. During the financial crisis of 2009, Akerlof and Shiller took it upon themselves to expand further on the term, devising five key ideas in which they associate with the phrase in Part I of the text. These key ideas are confidence, fairness, corruption, money illusion, and stories. The authors believe that animal spirits are present in the everyday economy and they must be taken into account otherwise economic policies may not be particularly useful.
Animal spirits are a product of irrational behavior and are a major driving force in the economy. Intuitive then is the notion that animal spirits are also heavily involved in the process of economic boom and bust cycles. This much is straightforward and in reality seems to be the case. Animal spirits, which were initially defined by John Maynard Keynes, characterizes a variety of exogenous variables that could not be accounted for in the mainstream rational economic theories of the time. This definition was later reclassified by Akerlof and Shiller in their title book and provided some of the mechanics behind seemingly irrational behaviors. Akerlof and Shiller described and highlighted five specific features of animal spirits that affect the
F. Scott Fitzgerald delineated the Roaring Twenties in The Great Gatsby as “the parties were bigger. The pace was faster, the shows were broader, the buildings were higher, the morals were looser, and the liquor was cheaper.” It was the era marked by social changes and splendous parties and self-made millionaires. However, unprecedented to Fitzgerald and many of his contemporaries was that said glamourous lifestyle was built on a precarious foundation. When the stock market crashed in 1929, it put a period to the beguiling era and opened Americans to a horrid epoch. Yet, in actuality, the Stock market crash is an inexorable consequence of a time so reckless such as the Roaring Twenties. Some identified causes of the eventual crash are margin buying, overproduction of goods, and banks investing in stocks with depositors’ funds.
During the prologue, it is described that a financial analyst, Meredith Whitney, made national headlines for successfully predicting that Citigroup firm needs to “slash its dividend or go bust.” This book makes gives the impression that Whitney started the beginning of the economic collapse. This seems unlikely; Whitney only made the prediction that she made based off of her analysis of the markets. Fortunately, she gained the nation's ear. She called out all Wall Street firms and told them that their investments and mortgages were worthless. She was bold and truthful when the everyone else doubted her.
The 1985 Argentine film La Historia Oficial, directed by Luis Puenzo, is truly deserving of its academy award. The film is set in Argentina in the 1980s, during the last years of a military dictatorship that killed and tortured thousands of its own people who did not agree with their radical polices. The film has many underlying themes especially regarding government-sponsored terrorism, classroom politics and the authority of certain texts. However, one theme is represented again and again throughout the film. The theme that “machismo” will reign supreme in the relationship between males and females, and males in political aspect in the country of Argentina. Men had to hold all the authority in the household and all aspects of life, including
... Therefore the action of removing all your money from the bank when there is a stock market downturn is immoral according to the first formulation of the Categorical Imperative. The fact that a person cannot withdraw their money from a bank because of moral restraints shows that there are some serious problems with the moral theory at work.