Moral imagination or heuristic toolbox? Events and the risk assessment of structured financial products in the financial bubble
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Business Ethics 20 (2):148-158 (2011)
The paper uses the example of the failure of bankers and financial managers to understand the risks of dealing in structured financial products, before the financial collapse, to investigate how people respond to crises. It focuses on whether crises cause people to challenge their habitual frames by the application of moral imagination. It is proposed that the structure of financial products and their markets triggered the use of heuristics that contributed to the underestimation of risks. It is further proposed that such framing heuristics are highly specialised to specific contexts and are part of a wider set of heuristics that people carry in their cognitive ‘adaptive toolboxes’. Consequently, it is argued, when a crisis occurs, the heuristics are not challenged, but are simply put away, and other more appropriate heuristics are put to use until a sense of normality returns, and the use of the old heuristics is resumed
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References found in this work BETA
Daniel Kahneman, Paul Slovic & Amos Tversky (eds.) (1982). Judgment Under Uncertainty: Heuristics and Biases. Cambridge University Press.
Gerd Gigerenzer (1999). Simple Heuristics That Make Us Smart. Oxford University Press.
Michael Billig (1995). Arguing and Thinking: A Rhetorical Approach to Social Psychology. Philosophy and Rhetoric 28 (1):83-86.
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