Financial information as psychological construction: Information processing, news, and rumors in financial markets by Professor Thomas Oberlechner

SYNOPSIS
Professor Oberlechner’s presentation provides a psychological in-depth glimpse into information processing in the foreign exchange market, the largest financial market created in the history of mankind. Insights are based on a survey among hundreds of the ultimate decision makers in this market, i.e., foreign exchange traders, and among financial journalists working for leading financial news media. Perceiving each other as the most important information source, traders and journalists are engaged in a circular pattern of market information processing, in which the two sides of the market, i.e., trading participants and financial news services, form a highly interdependent relationship. Moreover, recent technological developments have profoundly changed the nature of reporting and the role of financial news media. For example, traders rate the speed of news and its anticipated impact on other market participants as more important than its perceived accuracy. These results prepare a surprising connection to psychological knowledge about the formation and dynamics of rumors. They also explain the importance played by rumors in financial markets, and stress psychological aspects of information and communication in financial markets.

ABOUT THE SPEAKER
Thomas Oberlechner is Professor of Psychology at Webster University in Vienna. His research on psychological aspects of decision making in financial markets has led him into the trading floors of many of the world’s leading banks; results have appeared in numerous academic and professional journals in psychology and finance. Professor Oberlechner is author of the books The Psychology of the Foreign Exchange Market (Wiley) and The Psychology of Ethics in the Finance and Investment Industry (Research Foundation of CFA Institute). A trained and licensed clinical psychologist and psychotherapist, he holds a Master’s degree (Counseling and Consulting Psychology) from Harvard University and a Ph.D. and J.D. from University of Vienna.