Donald MacKenzie writes:

Traders’ culture is rich and reflexive. The new academic specialism of ‘behavioural finance’ uses experimental evidence and price data to identify psychological biases that affect the way traders behave, but traders already understand at least some of those biases. A common one, for instance, is the reluctance to realise a loss by liquidating a loss-bearing position. Even professional traders will often avoid selling securities in a situation in which they would never dream of buying them, because to sell them would turn a paper loss into a real one. Traders call being attached irrationally to a position being ‘married’ to it. In the pits of the Chicago Board of Trade, Zaloom says, traders could sometimes be heard humming the wedding march in mockery of each other.

(LRB 1 November 2007)

Chicago | hardback 224 pp. |ISBN: 9780226978130