Watch: The psychology of financial markets

Professor David Tuckett (UCL Psychology & Language Sciences) is examining the role emotions and stories play in traders? financial decisions. Click on the player below to watch Professor Tuckett discuss his findings. Professor Tuckett said: 'About ten years ago, I began to be interested in bringing together psychology, economics and sociology to try to understand behaviour in financial markets, my interest being in instability, and why there are booms and crashes. ?In 2007, actually leading up to the crash, I interviewed 50 of the top money managers in order to understand something about the decision-making context, in which they make their decisions to buy, hold and sell financial assets. ?What I found is that their work is characterised by how to deal with uncertainty and ambiguity. Conventional economic thinking does define uncertainty very clearly, but having defined it, they then more or less ignore it. When it comes to making real decisions, they have to make guesses about the future and they have to interpret information which is inherently ambiguous so any number of intelligent people can perfectly reasonably reach different conclusions about it.