 |
|
| View previous topic :: View next topic |
| Author |
Metaphor |
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
 Posted: Fri Nov 02, 2007 6:32 am Post subject: Metaphor |
 |
|
Agent vs. Object metaphor and causation in the market behavior:
| Quote: | John Authers: Mind your metaphors in the markets
By John Authers
Published: October 26 2007 17:37 | Last updated: October 26 2007 17:37
Friday of last week, you almost certainly knew, was the 20th anniversary of the Black Monday stock market crash of 1987. Seemingly the entire financial media – the Financial Times included – reminded investors of this with extensive coverage of the day when stock market falls across the globe ended with a record 22 per cent fall for the Dow Jones Industrial Average.
How did investors respond this time? They sold. The world again saw a succession of sell-offs, with the Dow and the other major US indices down 2.5 per cent. Not another Black Monday, but the worst day in many months.
This was almost certainly not a coincidence. This is not because the date October 19 has mystical properties. Rather, investors reacted to outside stimuli – coverage in the financial media – in a way that humans will always react.
Much work in finance in recent years has focused on understanding how investment decisions are made, using experimental psychology. A famous experiment – part of research that won a Nobel prize – was conducted by Daniel Kahneman and Amos Tversky.
Subjects were asked a question few could answer without consulting an atlas: how many United Nations members’ countries are there in Africa? Before answering, the scientists spun a “wheel of fortune” that would produce a number from 0 to 9.
Answers to the question were very likely to include the number that came up, even though no attempt had been made to suggest the random number had any relevance to the question.
This was an example of the mental shortcut known as “anchoring”. With a number in their minds, people could not help anchoring their answers with it.
Similarly, with the news full of dramatic stories about investors selling, it is not surprising that this prompted investors to sell.
Financial researchers are now analysing the news that investors receive in ever greater detail, looking for clues on how investors process information.
Along the way, they have moved from experimental psychology to something that looks like literary criticism. A new paper by researchers from Columbia and Cornell universities and the University of California Los Angeles breaks down market commentary on television and newspapers by its use of metaphor.
Their theory is that investors will process “agent” metaphors, when the language treats the market as though it were a living thing, differently from “object” metaphors, which imply that the market is like a physical object.
Examples of “agent” metaphors might include “the market powered forward,” or “the market rallied”. An “object” metaphor would be something like “the market dropped like a stone”.
Cognitive psychology suggests that agent metaphors imply that the market will continue moving in the same direction. If the market is “powering forward,” readers will unconsciously interpret this as meaning that market will keep on powering forward. If it “bounces” or “thuds”, they will not make that assumption
The researchers had another hypothesis. Show people how the market has moved in the form of a column of dates and column of closing prices, and they will not necessarily expect the current trend to continue. Present the same data in the form of a line on a graph, and they will.
They tested this in a huge series of experiments in which participants (students at US universities) were asked to predict future price trends. They were all given the same information about recent price movements, but some received it in the form of a graphic and others as a list of figures. The other key difference was in the brief explanations that were offered. Some used agent metaphors, while others used object metaphors, or no metaphor at all.
As predicted, subjects were more likely to predict that trends would continue if they had been shown a graph, and if they had heard an agent metaphor.
Also, commentators tended to use agent metaphors for markets that were going up while object metaphors were used more for markets going down.
Commentators’ choice of metaphors is therefore a factor in the tendency of investors to believe that markets going up will keep going up – while not being so gloomy that falling markets will continue to fall. Thus, commentators’ choice of metaphors – even when they are making no conscious attempt to explain why the market is moving – is a part of the phenomenon of market bubbles. The authors quote Sartre, who said that “words are loaded pistols”. Writers may offer them as ornaments, “but their audiences can still get hurt”.
This is sobering for those of us who make a living writing commentary about the market. The impact of these metaphors on investors is unconscious; and often the same is true of the choice of such terms by commentators. In future, I will mind my metaphors.
Metaphors and the market: Consequences and preconditions of agent and object metaphors in stock market commentary, by Michael W.Morris, Oliver J. Sheldon, Daniel R. Ames and Maia J. Young. |
Note: this is a bigger story. Sometimes the market is it's own author.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
 |
| Author |
Metaphor Replies |
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Sun Nov 21, 2010 8:07 pm Post subject: |
|
|
| Quote: | What are we to make of the brain processing literal and metaphorical versions of a concept in the same brain region? Or that our neural circuitry doesn’t cleanly differentiate between the real and the symbolic? What are the consequences of the fact that evolution is a tinkerer and not an inventor, and has duct-taped metaphors and symbols to whichever pre-existing brain areas provided the closest fit?
|
Last spring, BP stained us all.
http://opinionator.blogs.nytimes.com/2010/11/14/this-is-your-brain-on-metaphors/
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Jun 10, 2010 9:30 am Post subject: |
|
|
May 21
So, having smelled out the subprime tendrils in '07 (when Bernanke said housing was a $50 billion problem) why did I miss it in Europe. Because it's not there.
Okay, Greece is "toxic," then what? Okay there's an array of banks into which that debt is woven and cross-capitalized. --All within an imperfect, imbalanced system called "Europe." And the pressure is on. The maximum pressure we should all know, at an economic trough wherein sovereigns become the lender of last resort. The bigger the bust, the heavier the strain. Is anyone really surprised here?
But europe is most profoundly NOT a CDO. In this case Bernanke's response is right: the problem is a quantity. As such it is "quantifiable." Yes it's bad, and, yes, it strains capital ratios in a daisy chain of unexpected writedowns. But just like a big bank or large insurer this is business--force-majeur and all. Containment is not the fix. The fix lies within.
The killer in subprime was the leverage compounded on instruments of oopacity, spread throughout the world. All stamped "AAA." Nowhere, nobody, nohow to hide. And the most vulnerable was where it mattered the most, the oligopolistic institutions of high finance--where everything else is levaged to and too. See "In God We Trust" below. Panic is the only rational reaction.
With sovereigns we have PAR. Or, at least its perpetual possibility. A state is not a thing. It can be absorbed as in war or peace (europe); split, renamed, revolutionized, spun off--but it's not going away. Argentina an obvious objection? It's the proof.
And, yes, they can all go together. But then we got bigger problems than money. Geography is destiny--and so too, production. The world, as we care to know it, can never go out of production.
We don't do 2008 again.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
|
| Back to top |
|
|
Please log in to view without the ad banners |
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
Powered by phpBB
|
FAQ
Search
Memberlist
Usergroups
Statistics
Register
Profile
Log in to check your private messages
Log in
