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Finance Isn’t as Amoral as It Seems March 6, 2012

Posted by proeconomia in Main, On the crisis, Opinion.

That you will read! Two parts from Robert Shiller @ Yale, here is part one and here is part two. Here are some interesting quotes from the second part:

“When someone participates in a business that seems in any way sleazy, that person may experience the discomfort of what psychologists call “cognitive dissonance.” To maintain self-esteem in such circumstances, people may revise their beliefs. Hypocrisy is one manifestation of this; a person espouses opinions mainly out of convenience and to justify certain actions, while often at some level actually believing them. Social psychologists have shown how cognitive dissonance leads with some regularity to moral lapses — or, at times, to what we might call “sleaziness.””

“But the finance professions also attract people who are relatively invulnerable to cognitive dissonance: traders or investment managers who delight in the truth that is ultimately revealed in the market. Troubled by hypocrisy, they seek vindication not by sounding right but by being proved right. Many financial theorists have tried to represent people as merely profit maximizers, perfectly selfish and perfectly rational. But people really do care about their own self-esteem, and profit maximization is at best only a part of that.”

“The further success of financial capitalism once again depends on people adopting a more nuanced view of human nature as it is expressed in a financial environment. In an economic system that is essentially good overall, we have to accept that there will be some less-than-high-minded behavior.”




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