Scenarios as narratives

Beach, Lee Roy

doi:10.1002/ffo2.58

Cited by 24 publications

(19 citation statements)

References 46 publications

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“…Indeed, merely imagining a scenario to be true increases judgments that it is true (Koehler, 1991). In line with these findings, Beach (2020) has argued that conceptualizing scenarios as narratives makes sense of a variety of forecasting biases, although relatively little work has directly investigated forecasting through a narrative lens. Finally, although not experimental, interviews with professional money managers (Tuckett, 2011(Tuckett, , 2012 support the idea that professional investors rely largely on narratives to make decisions.…”

Section: Making Sense Of Financial Marketsmentioning

confidence: 94%

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Narrative Expectations in Financial Forecasting

Johnson¹,

Tuckett²

2021

Preprint

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How do people form expectations about the future? We use amateur and expert investors’ expectations about financial asset prices to study this question. Three experiments contrast the rational expectations assumption from neoclassical economics (investors forecast according to neoclassical financial theory) against two psychological theories of expectation-formation—behaviorally-informed expectations (investors understand empirical market anomalies and expect these anomalies to occur) and narrative expectations (investors use narrative thinking to predict future prices). Whereas neoclassical financial theory maintains that past public information cannot be used to predict future prices, participants used company performance information revealed before a base price quotation to project future price trends after that quotation (Experiment 1), contradicting rational expectations. Importantly, these projections were stronger when information concerned predictions about a company’s future performance rather than actual data about its past performance, suggesting that people not only rely on financially irrelevant (but narratively relevant) information for making predictions, but erroneously impose temporal order on that information. These biased predictions had downstream consequences for asset allocation choices (Experiment 2) and these choices were driven in part by affective reactions to the company performance news (Experiment 3). There were some mild effects of expertise, but overall the effects of narrative appear to be consistent across all levels of expertise studied, including professional financial analysts. We conclude by discussing the prospects for a narrative theory of choice that provide new micro-foundational insights about economic behavior.

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Section: Making Sense Of Financial Marketsmentioning

confidence: 94%

“…Second, research on forecasting suggests that people use narratives to predict future events (Beach, 2020;Lawrence et al, 2006).…”

Section: Making Sense Of Financial Marketsmentioning

confidence: 99%

Narrative Expectations in Financial Forecasting

Johnson¹,

Tuckett²

2021

Preprint

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“…Many scholars claim that we live today in the mass surveillance society or surveillance capitalism (Lupton, 2015;O'Neil, 2016;Zuboff, 2019). Through datafication, citizens' agency online is transformed into quantified data that are used both by public and non-public actors (Van Dijck, 2014).…”

Section: Dig Italiz Ation Governan Ce and Value Smentioning

confidence: 99%

“…Data protection is an issue in all four scenarios but especially in the Scenario 2. As this scenario shows, if they are not protected by policy and legal frameworks, citizens might turn into pawns controlled by digital companies, through access to their digital data (from health and bank records, for example, to personal and professional use of technologies) (Zuboff, 2019). Many experts we consulted suggest that data privacy rights are human rights and "should never become for sale" (Researcher 3, personal communication, 11 June 2019).…”

Section: Data Ownership and Protectionmentioning

confidence: 99%

“…For example, as seen in the Super Collaborative Government scenario, technology could contribute to making systems more efficient or connecting and allowing deliberations between policy makers, citizens, and other actors and democratizing the system (Bloom & Sancino, 2019). In parallel, the massive economic growth of several big digital companies led to an imbalance of power relations and gave them an unprecedented power concentration and control over public debate, which continues to be a challenge for democracy, especially as a big part of the public discussion today takes place online (Zuboff, 2019).…”

Section: Sustainable Engagement Of Citizens Through Long-term Democmentioning

confidence: 99%

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Imagining democratic societies of the future: Insights from a foresight study

Vesnić-Alujević

2021

Futures & Foresight Science

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With the rise of polarizations, populism, anti-establishment parties, lack of political knowledge, distrust, growing inequalities and complex systems of voting and registration, democracy faces many challenges and instabilities (e.g. de Blok et al, 2019; Lindberg, 2019; Vachudova, 2019). It is believed that weak institutions, along with growing neoliberalism, are a key obstacle for sustainable development in the future (Krake, 2018), as well as a root cause of an increasing gap between those who govern and those who are governed (Gudowsky & Rosa, 2019). The dissatisfaction of citizens is seen throughout and beyond Europe (Giugni and Grasso, 2019). In the context of TUNA (Turbulent-Uncertain-Novel-Ambiguous) or VUCA (Volatility-Uncertainty-Complexity-Ambiguity) conditions in which we live nowadays (Ramirez & Wilkinson, 2016), we need to reflect on and anticipate how democracy could be renewed and preserved for the future and how political institutions need to adapt to be better fit for future. Imagining the future and creating visions and expectations, as an important part of social and political life, are the focus of several academic fields, primarily: futures studies (Bell, 2003; Dator, 2002); sociology of expectation (Skjølsvold, 2014); Science and Technology Studies (Jasanoff & Kim, 2013). They shape collective understanding and visions of a "good" society and possible futures, as well as the feasible agency in the present (Groves, 2013; Jasanoff & Kim, 2013). Consequently, they impact the state, political institutions and society (Jasanoff, 2004). We also draw here from the concept of "civic imagination", as "the capacity to imagine alternatives to current cultural, social, political, or economic conditions world", as well as citizens' agency to make the change and be "an equal participant within a democratic culture" (The Civic Imagination Project, 2017; https://www.civic imagi natio nproj ect.org/). Likewise, future literacies and the development of a foresight culture are based on the capacities to imagine and anticipate the future (Miller 2018; Candy, 2018). In the same context, Vervoort et al.

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Narrative expectations in financial forecasting

Johnson

Tuckett

2021

Behavioral Decision Making

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How do people form expectations about the future? We use amateur and expert investors' expectations about financial asset prices to study this question. Three experiments contrast the rational expectations assumption from neoclassical economics (investors forecast according to neoclassical financial theory) against two psychological theories of expectation formation—behaviorally informed expectations (investors understand empirical market anomalies and expect these anomalies to occur) and narrative expectations (investors use narrative thinking to predict future prices). Whereas neoclassical financial theory maintains that past public information cannot be used to predict future prices, participants used company performance information revealed before a base price quotation to project future price trends after that quotation (Experiment 1), contradicting rational expectations. Importantly, these projections were stronger when information concerned predictions about a company's future performance rather than actual data about its past performance, suggesting that people not only rely on financially irrelevant (but narratively relevant) information for making predictions but erroneously impose temporal order on that information. These biased predictions had downstream consequences for asset allocation choices (Experiment 2), and these choices were driven in part by affective reactions to the company performance news (Experiment 3). There were some mild effects of expertise, but overall the effects of narrative appear to be consistent across all levels of expertise studied, including professional financial analysts. We conclude by discussing the prospects for a narrative theory of choice that provide new microfoundational insights about economic behavior.

show abstract

Scenarios as narratives

Cited by 24 publications

References 46 publications

Narrative Expectations in Financial Forecasting

Narrative Expectations in Financial Forecasting

Imagining democratic societies of the future: Insights from a foresight study

Narrative expectations in financial forecasting

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