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Article
What we learn about global systemic risk with neurosciences
Neuroeconomics eJournal (2013)
  • Armando F Rocha
Abstract
Financial market crises are frequent events that trigger large financial losses and represent important global systemic risk (GSR). GSR forecasting is, therefore, a necessity to avoid the collapse of the global financial market. Understanding GSR dynamics is imperative if GSR is to be forecasted and controlled. Traditional finance theories have developed many tools for risk management that proved to be unreliable in the case of the 2008 Crisis. Recent results on financial decision-making provided by Neurosciences have being used to model the stock market dynamics. This approach is used, here, to model stock price evolution in 20 bourses during the period between January, 3, 2007 and September, 9, 2011. Present results show that: a) the market humor, calculated as a function of the conflict associated with the stock benefit and risk evaluations and with the stock volatility, provides an adequate measure of a systematic global systemic risk, and b) humor threshold variation reflect unsystematic global systemic risks.
Keywords
  • Neuroeconomics,
  • Stock Market,
  • Finances,
  • Global risk
Publication Date
2013
Citation Information
Armando F Rocha. "What we learn about global systemic risk with neurosciences" Neuroeconomics eJournal Vol. 5 Iss. 12 (2013)
Available at: http://works.bepress.com/armando_rocha/9/