This is a book about traders in financial markets: what they do, the kind of people they are, how they perceive the world they inhabit, how they make decisions and take risks. This is also a book about how traders are managed - the best and the worst examples - and about the institutions they inhabit: firms, markets, cultures, and theories of how the world works. How these institutions function, how traders are managed, and how traders view the world, all have
profound effects on the wider financial environment. This book explores these relationships and their implications theoretically and empirically.
The data discussed in this book draw on a three-year project researching the psychological and social influences on the behaviour and performance of traders in investment banks. 118 traders and managers in four leading organizations participated. Data were collected through semi-structured interviews supplemented by questionnaires, measures of personality, risk propensity and a novel computer based measure designed to assess illusion of control and other cognitive biases.
The authors' approach to writing this book is explicitly interdisciplinary. They draw on sociology, psychology and economics in order to illuminate the work of traders and the world they inhabit.
The book is a significant contribution to the growing body of research and literature which suggests that if we are to effectively understand financial markets and the actors who inhabit them, the insights of neo-classical financial economics need supplementing with a broader range of social science approaches.
The book will be of value to researchers interested in the functioning of financial institutions and markets, to those with an interest in market regulation and to practitioners wishing to benefit from an analytical perspective on the challenges facing traders and their managers.
Mark Fenton O'Creevy is Senior Lecturer in Organisational Behaviour, and Director, Programmes and Curriculum, at the Open University Business School. Nigel Nicholson is Professor of Organizational Behaviour at the London Business School. He has been honoured by the American Academy of Management with an award for his contribution to theory and method, and is a Fellow of both the British Psychological Society and the British Academy of Management. Emma Soane is a Reader at Kingston Business School. She is a Chartered Occupational Psychologist. Paul Willman is Professor in Employment Relations and Organisational Behaviour at the London School of Economics and Political Science. He is a former Editor in Chief of Human Relations and a Fellow of the Centre for Economic Performance, London School of Economics and Political Science.
1. Introduction ; 2. The Growth of Financial Markets and the Role of Traders ; 3. Economic, Psychological, and Social Explanations of Market Behaviour ; 4. Traders and Their Theories ; 5. A Framework for Understanding Trader Psychology ; 6. Risk Takers ; 7. Becoming a Trader ; 8. Managing Traders ; 9. Conclusions ; 10. Appendix