Constructing Conviction through Action and Narrative: How Money Managers Manage Uncertainty and the Consequences for Financial Market Functioning

Socioecon Rev (2015) 13 (2): 309-330 first published online May 2, 2014 doi:10.1093/ser/mwu020 Abstract Full Text (HTML) Full Text (PDF)

Posted: 9 Mar 2014 Last revised: 7 Dec 2015

Kimberly Chong

University College London - Centre for the Study of Decision-Making Uncertainty

David Tuckett

University College London (UCL)

Date Written: January 1, 2014

Abstract

By selecting different financial assets to hold in their portfolios, fund managers determine the allocation of capital in global markets. Recent events have revealed profound uncertainty at the heart of such markets, the manifest existence of emotion, and the way confidence is crucial to orderly market functioning. Using findings from interview studies with fund managers, supported by ethnographic observation, we demonstrate the irreducible cognitive and emotional conflicts which face actors and which threaten their daily operations. We introduce the term conviction narrative to analyse how they manage these conflicts on a day to day basis, and with what collective consequences. Our thesis is that expertise and conviction in financial markets have constantly to be created and renewed through a combination of psychological and social action with the implication at the macro level that while financial markets can be orderly they are so in an intrinsically fragile way.

Keywords: Financial markets, Confidence, Trust, Uncertainty, Interdisciplinarity, Evaluation

JEL Classification: D81, D83, Z13, G12, G11

Suggested Citation

Chong, Kimberly and Tuckett, David, Constructing Conviction through Action and Narrative: How Money Managers Manage Uncertainty and the Consequences for Financial Market Functioning (January 1, 2014). Socioecon Rev (2015) 13 (2): 309-330 first published online May 2, 2014 doi:10.1093/ser/mwu020 Abstract Full Text (HTML) Full Text (PDF). Available at SSRN: https://ssrn.com/abstract=2405524 or http://dx.doi.org/10.2139/ssrn.2405524

Kimberly Chong

University College London - Centre for the Study of Decision-Making Uncertainty ( email )

Gower Street
London, WC1 6BT
United Kingdom

David Tuckett (Contact Author)

University College London (UCL) ( email )

Gower Street
London, WC1E 7HU
United Kingdom

HOME PAGE: http://www.ucl.ac.uk/psychoanalysis/unit-staff/david.htm

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