Sustainable Investment and Corporate Governance Working Papers, Sustainable Investment Research Platform
No 2010/13:
Social Influence in Stockmarkets: A Conceptual Analysis of Social Influence Processes in Stock Markets
Anders Biel ()
, Maria Andersson, Martin Hedesström, Magnus Jansson, Eva-Lotta Sundblad and Tommy Gärling
Abstract: This paper focuses on the role of social factors for
booms-bubbles-busts cycles in stock markets. It is argued that indirect and
direct social influences are important contributors by reinforcing stock
investors’ cognitive biases exaggerated by affective influences. A review
of herding research primarily undertaken by financial economists is
followed by a demonstration that psychological theories of direct social
influence (imitation) have bearings on the understanding of the herding
phenomenon in stock markets. How to continue this research with relevance
for regulations of stock markets is discussed.
Keywords: Social influence; stock investments; conceptual analysis; (follow links to similar papers)
15 pages, July 1, 2010
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