Free Will and “Animal Spirits”: The Deviation of Financial Nature-The Phenomenological Interpretation of Irrational Financial Markets

Ren Ruimin, Zuo Yonghua

Journal of Shanghai University of Finance and Economics Vol. 18, Issue 03, pp. 26 - 35 (2016)  DOI:10.16538/j.cnki.jsufe.2016.03.003

Abstract

The essence of modern finance is to build a feasible scheme for economic activities and help individuals or enterprises to achieve action goals. Finance has a high degree of instrumental rationality and its effectiveness depends on reasonable purpose. Virtual characteristics and regulatory lag of financial markets make free will expand and innovation more subjective. High probability of financial markets in the acquisition of wealth is the basis of mutual construction by the "animal spirits" and "irrational exuberance". Free will and "animal spirits" dominated by greed reflect the instinctive greed of people, and lack social characters of freedom, equality and trustworthiness advocated by the spirits of entrepreneurship and contracts, leads to extremely narrow financial innovation & financial activities, and deviates from the nature of finance, thereby resulting in irrational market.

Keywords

financial essence; financial market; free will; animal spirit; irrational exuberance