Risk Takers
Risk Takers
Profiling Traders
There have been issues regarding the extent to which an individual act is dependent on the inner forces of the individual (agency) or the surrounding circumstances (context). With regard to a nature versus nurture debate, the environmentalist side would say that conditions would determine the actions and the adaptations of the individual, while the agency side would assert that individuals control what would happen in their environments to suit their purposes and goals. This chapter looks at the economic implications of these views of traders' behaviour on the operations of financial markets. In analysing whether traders become either ‘risk seeking’ or ‘risk averse’, the chapter identifies the fallacies regarding risks and differentiates the four kinds of risks by discussing the pure probability calculus, the multi-player game, the formbook gamble, and the incalculable gamble.
Keywords: agency, context, nature versus nurture, risk, environment
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