The biology of risk. (2014). By eliminating uncertainty has the Federal Reserve actually helped inflate market bubbles?
“By eliminating uncertainty in policy, has the Federal Reserve spread complacency among the financial community and actually helped inflate market bubbles? The author argues that greater transparency at the Fed
John Coates, Senior Research Fellow in Neuroscience and Finance, University of Cambridge
New York Times Sunday Review, 7 June 2014
By eliminating uncertainty in policy, has the Federal Reserve spread complacency among the financial community and actually helped inflate market bubbles? The author argues that greater transparency at the Fed has released one of the most powerful brakes on risk taking in stocks.
“Most models in economics and finance assume that risk preferences are a stable trait, much like your height. But this assumption, as our studies suggest, is misleading. Humans are designed with shifting risk preferences. They are an integral part of our response to stress, or challenge.”
Read the full article here: The biology of risk.
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