Charles Noussair, Ph.D.
Professor
Eller Professor of Economics
Director, Economic Science Laboratory

Zoom: https://arizona.zoom.us/j/89312074650
 

 

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Emotions and Asset Prices

Abstract: Popular commentators associate asset market behavior with emotional states. For example, a stock market is said to be "exuberant" when prices are increasing. The market is said to exhibit "fear" when prices are falling. The experimental research described in the lecture studies the possible scientific underpinnings behind this intuition of a relationship between market activity and emotions. The research explores the direction of causality: Do the emotions of traders affect asset prices or does the market activity affect emotions? The experiments show clearly that it is the latter. We also discuss the relationship between emotional states, beliefs about future prices, and market price changes.