How Investors Use Stories to Tame Uncertainty

In the book, The Soros Lectures: At the Central European University, Soros mentioned funding a new project called the Institute for New Economic Thinking (INET). To see if he followed through with his pledge, I searched and discovered that the Institute was indeed active and providing grants for research.

One of the grants went to David Tuckett, with a background in psychoanalysis and sociology, who conducted interviews of hedge fund managers to learn how they made investment decisions. The research focuses on the use of emotion and "stories about investments". The idea that an emotional experience is inextricably tied to each financial investment decision is fascinating, and also the idea that a rational investor would never make investments in financial assets.

Watch the brief video for an explanation.