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Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
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Published: 09 January 2024

The Poverty from Stimulus in Financial Decision Making

Antony Ignatius K

Kollannur House, College Road

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

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doi

10.31014/aior.1992.07.01.555

Pages: 1-13

Keywords: Poverty of Stimulus, Financial Markets, Market Expertise, Cognitive Constraints, Bayesian-Learning, Market Dependence

Abstract

This paper delves into the concept of the poverty of stimulus in financial markets, particularly the supply and demand dynamic as proposed by Marshall, drawing parallels between linguistic theory and market behavior. Inspired by Chomsky's linguistic framework, we investigate the limitations of market participants' knowledge acquisition and decision-making processes. Utilizing real-world studies and academic research, we highlight instances where market participants exhibit cognitive constraints, suggesting the existence of innate structures guiding their understanding of market dynamics. We explore how market dependence, Bayesian learning, and information hierarchies align with the poverty of stimulus argument in markets, shedding light on the role of implicit knowledge in shaping trading strategies and outcomes. Through this interdisciplinary analysis, we advance the understanding of how market expertise evolves beyond simple supply and demand, acknowledging that market participants' abilities extend beyond the readily available stimulus, underscoring the presence of internal constraints within market behavior.

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