Chapter 9: Financial Psychopaths
Financial Behavior: Players, Services, Products, and Markets. H. Kent Baker, Greg Filbeck, and Victor Ricciardi, editors, 153-169, New York, NY: Oxford University Press, 2017.
Posted: 6 Jun 2017
Date Written: June 1, 2017
Abstract
The term “financial psychopath” was coined after the financial crisis of 2007−2008. Intended as a term of derision, the media used it to negatively label financial professionals, rather than to draw a clinical profile. The expression succinctly conveys the widespread post−2008 public anger and resentment toward those in the finance profession, particularly on Wall Street, who were responsible for damaging the world economy and destroying the personal wealth of many people. In the decades before the financial crisis, multiple factors had come together to change the operating structure of the financial landscape. This new environment was conducive to investment professionals’ engaging in transactions bearing the hallmarks of psychopathic behavior. What defines a financial psychopath? Is the answer in the individual’s personality traits, the behavioral edicts dictated by the environment within which he or she works, or a combination? This chapter attempts to answer these questions.
Keywords: behavioral finance, behavioural finance, financial psychopath, psychopathic behavior, financial crisis of 2007–2008, Wall Street, personality traits, clinical profile
JEL Classification: A12, D81, G00, G30, G10, M00, M10, M41
Suggested Citation: Suggested Citation