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Archetypes as Triggers of Financial Bubbles

"The author aims to demonstrate the workings of archetypes and proposes a measurement methodology designed to capture the subliminal forces that influence investment decisions."
Niklas Hageback Journal of Behavioral Finance, Volume 18, 2017 - Issue 1

Abstract

Sparking financial bubbles are irrational impulses—from mania to panic—that play a major role in collective human investment behavior. Contradicting the rational man theory, bubbles keep occurring. But to disregard its influences as aberrations have only rendered conventional economic theory as abstract academia with little practical value. However, allowing for the juxtaposition between the concepts of archetypes and the collective unconscious, as coined by the Swiss psychologist Carl Gustav Jung, and the generic anatomy of financial bubbles could provide fertile ground for an improved understanding of the seemingly irrational behavior. The author aims to demonstrate the workings of archetypes and proposes a measurement methodology designed to capture the subliminal forces that influence investment decisions.