Rigid journey Essay Example for Free

Rigid journey Essay It was a â€Å"rigid journey† that started with two voices and that ended with one. One is the voice of meaningless modernity. Disjointed and syncopated, this voice hopes to fit in with the norm, tirelessly finding meaning through misconstrued words. The other is the voice of an ailing past as it struggles to keep up with the present. It is the words of fable and myth, lost in the humdrum of everyday life. Coming in contact through an unexpected dialogue, these two voices collide but, further on, reveal their similarities in order to address the issues of their looming futures. Jonathan Safran Foer’s critically-successful debut novel Everything is Illuminated relishes in these two voices, speaking to its readers in dual tones as a metaphor of the different perspectives that arise from a problem of identity that epitomizes this generation: a generation fraught by issues brought about by concerns of industry, capitalism, and materialism. Part memoir, part travelogue, this novel primarily chronicles the travels of Jonathan Foer, a young Jewish-American writer of the same name as the author, who attempts to research his grandfather’s life in Ukraine and discover the woman who had saved him from apparent execution in the hands of Nazi soldiers. To make his trip remotely easier, he employs the help of Heritage Tours, a tour company that specializes in aiding Jewish-Americans retrace their roots in the Old Country. His guide and translator for this trip is Alex Perchov, a Ukrainian of the same age who is utterly enraptured by the American culture that reaching the State’s worshipped shores and becoming an accountant is all he has ever dreamed about. Along with the ride are Alex’s Grandfather, their supposedly blind driver, and his â€Å"seeing-eye bitch† Sammy Davis Junior, Junior. But, Foer, the author, also incorporates a second and third narrative amidst this backdrop of identity-searching. One, told in Jonathan’s voice, tells the story of his Grandfather’s shtetl or town, TrachimBrod, its fabled rise and evident fall during World War II. We can initially perceive the novel as a seeming coming-of-age story that finds its core in the retelling of the happenings of the Holocaust and its evident impact on its Jewish survivors and their kin. But, it also echoes of the capitalist ideologies that define our era and how it has come to mold our youth, as seen through the depiction of Jonathan and Alex. With this in mind, this paper aims to create an understanding of the hegemony within the text through the use of Marxist literary criticism. An Overview of Marxism and the Communist Manifesto At the heart of Marxism lies the struggle between classes, a definitive clash of ideologies brought about by the fight over the right of power. It is primarily a critique of the current Industrial Age society, wherein an apparent discrepancy between the growing bourgeois class and the working class began to be noticeable. Promulgated by Karl Marx in the early nineteenth century, Marxism finds its roots in the analysis of the source of power, the base of power, within a society and how this social class determines the course of production within a society (Marx and Engels 1848). Heralded as the core ideology of Communism, it is a politically-driven social theory that deems to see that the proletariat be considered a class, that the reigning bourgeois be overthrown, and that political power should be reverted to the proletariat (Marx, Engels, and Jones 15). Applied to literature, Marxism becomes a critique of the social structures and the point of authority found in the text, as concocted by the writer’s own perceptions of the history of class within the novel. The Communist â€Å"bible†, Karl Marx’s Communist Manifesto, co-written by Frederick Engels, calls the proletariat to arms in what they see as a social revolution unlike any other. They deem that Capitalist rulings of the working class as exploitative, seeing these people merely as dispensable commodity to yield production. They deem the bourgeoisie as state of â€Å"the abolition of individuality and freedom (22). † They narrate series of possible events to the dissolution of the bourgeoisie that would mean the rise of the proletariat and the erasure of any other remnants of the feudalist system (Marx and Engels 17). Over-all, it is deemed that the only answer to a social revolution is the forcible overthrow of the present reigning base of power, the denouncement of past social conditions, and the creation of a strong network of representative that would protect the individual rights of working men and women. A Dichotomy of Roles What makes Foer’s novel a definite stand-out in the literary scene is its experimentation with form and its boundless potentials. For his novel, he follows three narratives as told by the two primary characters of the text, Jonathan and Alex. Placed in the context of Marxism, there is an evident inner struggle between the two characters that is representative of their own social statuses and how they manage to deal with the issues specific to it. According to Marx’s groundbreaking treatise, â€Å"society as a whole is more and more splitting up into two great hostile camps, into two great classes facing each other: Bourgeoisie and Proletariat (Marx and Engels 9). † Although, most may deem this social division as outdated, it still reveals much about our current social structure that expected. In our globalized view, such structure can now be attributed to cultures dominating over each other, cultures that manipulate the flow of international relations given the power they retain through their economic superiority—a system that Marx had initially suspected. As with today’s society, American culture (though flailing amidst the rise of new economic powers) remains the power base and controls much of the world’s economic activity, and hence, becomes the source of all human institutions and ideologies, or what Marx calls, the superstructure. With this power behind them, the base is able to influence the direction that society is driven to, characterizing each element as they see fit. Evident in the novel is undisputed hegemony of American culture as presented through the character of Alex. Ensnared by the allure of money and progress, Alex is the quintessential American â€Å"wanna be†. He is driven to create an image of himself that is allegedly reminiscent of this culture: a womanizer, an excessive spender, a big talker. Evidence of this fascination with American culture can also be read in page 69 wherein Alex speaks with Jonathan over dinner and bombards him with questions about American life: â€Å"Are there good accounting schools? Are there Negro accountants? How much is the coffee there (Foer 69)? † All the answers elicit an excitement for this prevailing culture, all the more pushing Alex to value it more than he does his own. In a letter to Jonathan written purportedly after the his visit to Ukraine, he mentions that he is saving up to go to the States, and that in order to save money (despite his Father’s belief that he isn’t so), he stays at the beach and just thinks. He thinks that Jonathan is so lucky (52). These ideas of American culture, the American Dream, are in fact disseminated through the film medium as presented in the text when Alex says: â€Å"I dig American movies (2). † It is, in essence, a diluted imagery of what American culture is like as shown through the limited capacity of film. Gone are seemingly politically correct ideologies and from the vantage point of Alex’s restricted viewpoint of American culture we see the flaws of a race and gender divided structure. It is also necessary to note the importance of the Alex’s use of language in the text. His language is a mix of profundity and slang in an attempt to sound as American as possible, but failing miserably to communicate what he actually means in the process. His misconstrued language echoes the attempt of the working class to attain a level of equality with the bourgeois (American culture), but unsuccessfully doing so because the line that separates the two arenas can never be crossed. Alex’s character, in this sense, epitomizes the proletariat desire to obtain an amount of power (how miniscule) it might be from the dominating bourgeois by inculcating themselves within a culture created by the elite. When he took on the role of translate for Jonathan, Alex believed it to be an â€Å"unordinary (Foer 2)† experience. By taking on this Americanized persona, Alex believes he is setting himself apart from a family of three Alex’s, from his own culture. He yearns to â€Å"depart† from his class and seek a brighter one in another. But, I believe, that this is the tragedy of Alex. He deems to create for himself a new personality, an individuality, but through the acceptance of another ideological structure that might even be stronger and far more dangerous than the one he opts to leave behind. This is, as what Marx says, is a sense of false consciousness (Eagleton 103). â€Å"People are conditioned by the material world to accept certain ideas and beliefs as objective fact. They misunderstand their position and the meaning of their position. (Progreba 2). † On the other hand, we see Jonathan who departs from the States and its culture to find his roots in Ukraine. Armed with the picture of his grandfather and the picture of the woman who rescued him, he embarks on a journey to understand his muddled identity. Whereas, Alex looks at the American culture as one that would finally define him, Jonathan temporarily denounces it and searches for it in his history. This is evident in his chronicle of the history of his grandfather’s little village. But, similar to Alex, he finds fascination in a culture other than his own and looks up to it as a medium to understand his own identity. By narrating the events that led to the destruction of the village, from its establishment and his grandfather, Safran’s, rescue from the Nazis, Jonathan communicates with his past and forms a dialogue with it. For both young men, this search for identity traces itself to their yearning to reclaim their place in a society that alienates them. According to Marxist theory, the capitalist society alienates people in three different levels: first, the worker is alienated from what he produces; second, the worker is alienated from himself; and third, the worker is alienated from society. â€Å"The work of the proletarians has lost all their individual character, and consequently all charm for the workman. He becomes an appendage of the machine, and it is only the most simple, most monotonous, and most easily acquired knack that is required of him (Marx and Engels 14). † Jonathan, who has taken a leave of absence from university, finds himself at a loss regarding his future goals in life, some of which are imposed on him by the requirements of his social circle: fame and fortune. By following these, he would have to let go of his roots, of his own identity, and deliver products as what society needs of him. Hence, he finds his travel to Ukraine an opportunity for soul-searching, a method to deliver himself from the constraints of social responsibilities and discover his own potential as a person. When Alex questions Jonathan about his yearnings to be a writer, Jonathan answers him half-heartedly, as if questioning even his own decision to take on this career (Foer 69). But, by the middle of the novel, as implied in one of Alex’s letters to Jonathan, he had gone on back to university to pursue this career, perhaps already with an inkling of his own identity discovered during his visit in Ukraine. Alex, on the other hand, seeks deliverance in American culture. He detests his Father who bullies him and his â€Å"miniature† brother, Little Igor. He yearns to separate himself from this abusive authority and find solace in a culture that is â€Å"free† and â€Å"progressive†. We can view his Father and their travel company in the Marxist context as the Capitalist. Their company, Heritage Tours, having been a family business for three generations ties Alex intensely to the family that he hopes to leave behind. As his mother had said, she is extremely proud that her son had decided to taking the responsibility of acting as a guide for the â€Å"Jewish boy† instead of wallowing around doing nothing and wasting money (Foer 2). Marxist theory also expands on the notion of a â€Å"counter-hegemonic† culture that should be developed in order to retaliate against the prevailing social norms as promulgated by the ruling class. Essentially, the novel revolves around this, as with any text that centers on a search for identity and individuality. Alex and Jonathan both are at war with their societies which is why they seek to find it another, whether in more direct forms (like Jonathan’s) or discreetly (like Alex’s). There remains, in the story of these two individuals, a definite struggle to fight against hegemony and the norm. Conclusion The third narrative, as we have mentioned, are letters from Alex to Jonathan, still written in the same manner as he had spoken to us in his usual narrative. These letters, from mere discussion of their positions in life finally show the kind of relationship these two young men are able to foster. They are the acceptance of their brotherhood amidst the flurry of modern life, amidst the demands of their social classes and their inherent responsibilities. But, most importantly, as the novel proves, it serves as an insight into a quiet counter-revolution that prevails today. Works Cited: Eagleton, Terry. Criticism and Ideology: A Study in Marxist Literary Theory. William Clowes Ltd. : Suffolk, Great Britain. 2006 Foer, Jonathan Safran. Everything is Illuminated. Houghton Mifflin Books: New York, New York. 2002 Jones, Gareth Stedman. â€Å"Introduction. † The Communist Manifesto. Penguin Books Ltd. : USA, 1967 Marx, Karl and Frederick Engels. â€Å"The Communist Manifesto. † Socialist Labor Party of America. 2006. Retrieved from http://www. marxism. net/pdf/marx/comm_man. pdf

Television Violence :: essays research papers

Television Violence   Ã‚  Ã‚  Ã‚  Ã‚  Violence in television, is it turning our children into violent, destructive, and hateful toddlers. Yes or no? In today's society television plays such a big role in our everyday lives that it is hard to see if it effects our children's behavior. Television has the potential of being a very constructive learning tool, if used correctly. On the other hand if used in a destructive manner it could, hypothetically, turn our children and future leaders of tomorrow into deadly hate mongers. I believe that television does effect the way people think and behave.   Ã‚  Ã‚  Ã‚  Ã‚  In a survey given in 1978 at an unnamed college in Washington D.C., when asked if what was seen on T.V. effected the way they acted ,2% thought it did , 7% didn't know and ,91% didn't think it effected them at all(2). In 1993 a similar survey was given in London by the Broadcasting Standard Council( BSC ). When people were asked if they thought T.V. effected the way people behaved 41% said yes, 4% left without finishing the survey, and 55% said that they didn't think it effected the way people acted(14).   Ã‚  Ã‚  Ã‚  Ã‚  As seen in the survey the problem of television violence is being made more aware to the people of the world. The problem has also grown over the years to a more serious dilemma making the government start to try and solve the problem by initiating laws in which television stations must limit violence on T.V.(6). It is still not enough though the problem must be taken care of promptly before it changes society as a whole. If the problem is not taken care of swiftly then it could effect the future of the world by having violence rampage the streets of our towns.   Ã‚  Ã‚  Ã‚  Ã‚  In the past when television was first invented it was a much happier time. people could walk on our streets without having to care if they were going to make it home alive. I'm not trying to say that television is the reason that society today is so dangerously violent, but as violence on television evolved so did the violence on our streets. In the past there were not as many violent T.V. shows if there were even any. Also T.V. was more of a family recreation, most families could only afford one T.V. set so when children watched T.V. they were supervised by their family making violence almost an impossible thing to see if parents were not interested. Today, there are an average of three televisions per household so it is harder for parents to make Television Violence :: essays research papers Television Violence   Ã‚  Ã‚  Ã‚  Ã‚  Violence in television, is it turning our children into violent, destructive, and hateful toddlers. Yes or no? In today's society television plays such a big role in our everyday lives that it is hard to see if it effects our children's behavior. Television has the potential of being a very constructive learning tool, if used correctly. On the other hand if used in a destructive manner it could, hypothetically, turn our children and future leaders of tomorrow into deadly hate mongers. I believe that television does effect the way people think and behave.   Ã‚  Ã‚  Ã‚  Ã‚  In a survey given in 1978 at an unnamed college in Washington D.C., when asked if what was seen on T.V. effected the way they acted ,2% thought it did , 7% didn't know and ,91% didn't think it effected them at all(2). In 1993 a similar survey was given in London by the Broadcasting Standard Council( BSC ). When people were asked if they thought T.V. effected the way people behaved 41% said yes, 4% left without finishing the survey, and 55% said that they didn't think it effected the way people acted(14).   Ã‚  Ã‚  Ã‚  Ã‚  As seen in the survey the problem of television violence is being made more aware to the people of the world. The problem has also grown over the years to a more serious dilemma making the government start to try and solve the problem by initiating laws in which television stations must limit violence on T.V.(6). It is still not enough though the problem must be taken care of promptly before it changes society as a whole. If the problem is not taken care of swiftly then it could effect the future of the world by having violence rampage the streets of our towns.   Ã‚  Ã‚  Ã‚  Ã‚  In the past when television was first invented it was a much happier time. people could walk on our streets without having to care if they were going to make it home alive. I'm not trying to say that television is the reason that society today is so dangerously violent, but as violence on television evolved so did the violence on our streets. In the past there were not as many violent T.V. shows if there were even any. Also T.V. was more of a family recreation, most families could only afford one T.V. set so when children watched T.V. they were supervised by their family making violence almost an impossible thing to see if parents were not interested. Today, there are an average of three televisions per household so it is harder for parents to make

Spinal Cord Lesion Problem Solving Health And Social Care Essay

Scenario: A complete transverse spinal cord hurt occurs at degree T11/T12 vertebrae. See the worst instance scenario of complete lesion to turn to the undermentioned issues. A ) Describe which sections of spinal cord will be affected T11/12 lesions ( besides called paraplegia ) cause damage or remotion of the connexion between the Lumbar part and the encephalon. The sections above T11 ( C1-T10 ) will still be able to work decently. The lumbar sections ( Below T12 ) of the spinal cord will non be able to direct sensory signals up towards the encephalon through the white affair in the spinal cord, ensuing in deficiency of sensitiveness in that part. Descending piece of lands are besides damaged ; this consequences in loss of musculus control in that part because the encephalon can non direct encephalon signals. # Then comparison and contrast at 1 twenty-four hours and at 100 yearss after the hurt the followers: B ) loss of sensitiveness After a twenty-four hours of the hurt the patient will non hold any centripetal abilities from the legs. This is because the go uping centripetal signals can non be sent towards the encephalon. After 100 there will be no alteration from twenty-four hours 1. C ) musculus map The harm caused by the lesion does non let the musculus to work decently. Day 1 the patient will non experience anything and his encephalon can non direct signals to the musculuss leting controlled motion of the legs. After Day 100 the patient s leg will hold a decreased musculus tone compared to Day 1. The patient may besides see uncontrolled spastic physiological reactions ( explained underneath ) . D ) leg physiological reactions After the lesion occurs on the spinal cord, the spinal cord goes into spinal daze, all of the leg musculuss innervated bu the lumbar part below T12 become flaccid. 100 yearss after the incident, the patient might get down to acquire spastic physiological reactions. Compared to twenty-four hours 1 the spinal daze disables the automatic discharge in the spinal cord but in twenty-four hours 100 the physiological reaction discharge activates. However because of the harm, the centripetal signals do non go to the encephalon to let voluntary control from the encephalon, the signals merely travel in the automatic Ark below the site of harm this causes the spastic physiological reactions. Tocopherol ) continency Smooth musculus map is besides affected. The control of the vesica and sphincters which allow micturition will be impaired. T12 flat lesions cause flaccid vesicas, this is when patient will non be able to state when the vesica is full and can take to pulling of the vesica. At twenty-four hours one the patient will non be able to experience when their vesica is full, they will necessitate aid from the physician who will besides prove them and take the patients through a bladder direction plan. After 100 yearss the patient will be used to cognizing the clip when they are required to empty their vesicas due to following the bladder direction plan. This essay counts towards the concluding twelvemonth test. A upper limit of 10 % is available from this study. Maximum reply length one A4 page. Pay attending that you understand what people in wheelchairs experience. Announced 11.2.2011 Deadline for entry: 4th March 2011. To be handed in to Teaching Office- Harborne BuildingSpinal Cord Lesion: Problem Solving AssignmentSpinal cord hurt is when the spinal cord is damaged to an extent that its communicating with the encephalon is either impaired or removed. The most common causes of spinal cord hurt is through injury ( falls, auto accidents etc ) or diseases such as infantile paralysis. Overtime gilal cicatrixs incorporating astrocytes and macrophages start to develop. Glial cicatrixs besides contain chondoitin sulfate proteoglycans which inhibits the regeneration of axons forestalling the aa‚ ¬E?rewiringaa‚ ¬a„? of the nervousnesss in the spinal cord ( Bradbury et al 2001 ) Patients enduring from complete cross spinal cord T11/12 lesions ( besides called paraplegia ) will lose their connexion between the Lumbar part of the spinal cord and the encephalon, nevertheless the sections above T11 ( C1-T10 ) will still be able to work decently. The deficiency of communicating will forestall the lumbar sections ( Below T12 ) from directing sensory signals up towards the encephalon through the white affair in the spinal cord, ensuing in deficiency of sensitiveness in that part. Descending piece of lands are besides damaged ; this consequences in loss of musculus control in that part because the encephalon can non direct signals to the motor neurones. After a twenty-four hours of the hurt the patient will non be able to direct go uping centripetal signals towards the encephalon, this means that they will non hold any centripetal abilities from the legs, the sense of hurting is included. Blood flow is besides affected, the sympathetic tracts of the fringe system will non be able to increase blood flow of the arterias in the legs, and this affects the overall blood force per unit area of the organic structure. At twenty-four hours one the patient may still be in spinal daze and his encephalon would n't be able to have and centripetal information from his legs, unluckily The harm caused by the lesion does non let the musculus to work decently. At Day 1 the patient will non be able to voluntarily travel the musculuss controlled by the lumbar part. This causes complications with blood flow because the musculuss in the leg can non impel the deoxygenated blood against the force of gravitation through the vena. This plus the deficiency of sympathetic stimulation may take to ischemia. After Day 100 the patient s leg will hold a decreased musculus tone compared to Day 1 due to miss of musculus motion. The patient nevertheless may still be able to walk utilizing abdominal musculuss to travel the legs and either braces or clasps for support. During spinal daze, all of the leg musculuss innervated below T12 become flaccid. During twenty-four hours 1 the spinal daze will disenable the automatic discharge in the spinal cord but during twenty-four hours 100 ( after the daze ends ) the automatic discharge activates and the patient might get down to acquire spastic physiological reactions. The spastic physiological reactions are caused because action potencies reflex discharges are activated Smooth musculus map is besides affected. The control of the vesica and sphincters which allow micturition will be impaired. T12 flat lesions cause flaccid vesicas, this is when patient will non be able to state when the vesica is full and can take to pulling of the vesica. At twenty-four hours one the patient will non be able to experience when their vesica is full, they will necessitate aid from the physician who will besides prove them and take the patients through a bladder direction plan. After 100 yearss the patient will be used to cognizing the clip when they are required to empty their vesicas due to following the bladder direction plan. There are still overall alterations that the patient will hold to travel through. There are medicines that are available to assist patients get by with their state of affairs such as Muscle relaxants ( baclofen, Flexeril, Valium Etc ) and Nonsteroidal anti-inflammatory drugs to handle hurting. The patient will besides hold to set their life style because they will be utilizing a wheel chair Bradbury, E. J. , L. D. F. Moon, et Al. ( 2002 ) . â€Å" Chondroitinase ABC promotes functional recovery after spinal cord hurt. † Nature 416 ( 6881 ) : 636-640. McLachlan, E. M. and J. A. Brock ( 2006 ) . Adaptations of peripheral vasoconstrictive tracts after spinal cord hurt. Advancement in Brain Research. C. W. Lynne and P. Canio, Elsevier. Volume 152: 289-297. mimushasho4ever, Nacho ‘s accident T11-T12 Com, Jul 21, 2010, Online picture cartridge holder, Youtube, Accessed: 01 March 2010

Study On Efficient Market Hypothesis Finance Essay - Free Essay Example

Sample details Pages: 7 Words: 2096 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Efficient Market Hypothesis (EMH) is the theory behind efficient capital markets. An efficient capital market is one in which security prices reflect and rapidly adjust to all new information. The derivation of the EMH is mostly credited to the work of Fama. Don’t waste time! Our writers will create an original "Study On Efficient Market Hypothesis Finance Essay" essay for you Create order In 1965 the doctoral dissertation written by Fama was republished. In this Fama looks at the current literature on stock price behaviour and examines the distribution and dependence of stock price returns. He concluded that, it seems safe to say that this paper has presented strong and voluminous evidence in favour of the random walk hypothesis. Due to a better understanding of price formation in competitive markets, the random walk model was now seen as a set of observations that can be consistent with the efficient markets hypothesis. This switch began with observations published in a paper by Samuelson in 1965. Samuelson presented his proof in the general form, which helped in the understanding of the notion of a well-functioning market. His paper had the observation in competitive markets there is a buyer for every seller. If one could be sure that a price would rise, it would have already risen. Samuelson stated that arguments like this are used to deduce that competitive pri ces must display price changesthat perform a random walk with no predictable bias. Following on by the work done by Samuelson, as mentioned in the previous paragraph, a paper was published by Fama in 1970. This paper consisted of a comprehensive review of the theory and evidence of market efficiency. He defined an efficient market as one in which trading on available information fails to provide an abnormal profit. This paper was one of the firsts to distinguish between the three forms of market efficiency. The three forms of market efficiency are the weak form, semi-strong form and strong form. He concluded that the results are strongly in support of the weak form of market efficiency and that in short, the evidence in support of the efficient markets model is extensive, and (somewhat uniquely in economics) contradictory evidence is sparse. I will now summarise some papers that have been written on the criticism of the EMH. Although there has been a vast amount of literature published on the development and the support of the efficient market theory, there has also been various studies published criticising the EMH. This criticism comes about due to the fact that the EMH is difficult to test. A number of studies indicate anomalous behaviour, which appears to be inconsistent with market efficiency. Such anomalies include the small firm effect as talked about in a paper by Banz in 1981. Banz analysed monthly returns over the period 1931-75 on shares listed on the New York Stock Exchange. Over this interval, the fifty smallest stocks outperformed the fifty largest by an average of one percentage point per month, on a risk-adjusted basis. After the publication of this paper, many other authors published their own papers examining the subject of the small firm effect. A paper by Ball in 1978 points out that the evidence could equally indicate the shortcomings of the models of expected return. A paper by Fama in 1998 concludes that further study should not be done on developing behavioural based theories of stock markets that take into account the apparent anomalies, but that search for better asset pricing models should take president. There is also the area of behavioural finance that criticises EMH. I will look at this in more depth in the next section. Market Bubble While the EMH is generally regarded as the best theory that can describe the actions of market prices it is not perfect and sometimes events occur that contradict the EMH. One of these events is that of the bubble. A bubble is when a specific industrys market prices do really well, so well that prices seem to rise higher than the EMH dictates. Eventually, the bubble bursts and prices return to a price more in line with EMH. One famous bubble was that of the dot.com bubble. EMH does not explain why this bubble exists in the first place. This is one of the major criticisms of the EMH. Many academics have turned to the relatively new theory of behavioural financ e to explain the bubble. Behavioural Finance One area that has recently undermined the EMH is the work published looking at behavioural finance. As observed by Shleifer (2000) At the most general level, behavioural finance is the study of human fallibility in competitive markets. Behavioural finance incorporates elements of cognitive psychology into finance in an effort to better understand how individuals and entire markets respond to different circumstances. Behavioural finance is based on the principle that all investors are not rational. Some investors can be over-confident, while other less knowledgeable investors might be prone to herding effects. Shefrin (1999) was one such author to talk about behavioural finance. He is one author who argues that a few psychological phenomena pervade the entire landscape of finance. Harrington (2003) agrees with the notion that overconfidence can lead to irrational behaviour. She states that investors can become irrational and their ir rational behaviour affects their ability to profit from owning stocks and bonds. Of course, behavioural finance does have its draw backs. One of which is the fact that using instincts alone can result in a loss. This is due to human error. The person that is using their instincts in determining where to invest might not have the greatest financial knowledge in the first place. Also, this person might be having a bad day or be under a great deal of stress or be distracted in some other way. This could result in the wrong decision being made. Therefore, it is a good idea to use both behavioural finance on top of the traditional theories already in use today. This view is supported by an article by Malkiel (1989) who agrees with the notion that behavioural aspects have a great importance in stock market valuation. He argues that behavioural factors play an important role in stock valuation alongside traditional valuation theories. This is summed up by the following quote, market val uations rest on both logical and psychological factors. The theory of valuation depends on the projection of a long-term stream of dividends whose growth rate is extraordinarily difficult to estimate. Moreover, the appropriate risk premiums for common equities are changeable and far from obvious either to investors or economists. Thus, there is room for the hopes, fears, and favourite fashions of market participants to play a role in the valuation process. Another article from the Banker (2004) also supports the view that behavioural finance has a role to play alongside the traditional views. In this section I will look at literature that tries to see if behavioural finance can explain this bubble. Many authors have argued that bubbles can be caused by over enthusiasm. For example, the new communication technology of the 1990s was exaggerated (causing the dot.com bubble). By this I mean that the new innovation is by some corners, i.e. the media and governments, over triumphed. Th is can lead to irrational behaviour of investors. This can lead to investors becoming over confident in the technology or industry. Another factor of this over enthusiasm is that it could attract herding behaviour. The irrational investor will be more likely to invest in something that is being hyped up as they feel that others are doing the same thing. They will feel that if others are doing it then it must be a good idea for them to do it as well. A factor that will have led to the development of a bubble is that of speculation. One such author that observed the speculation effect on the dot.com boom was Giombetti (2000). Many informed investors would have probably over invested in a specific industry going against market theory. They will have done this on the hope that their investment will pay off. Even if their investment were initially at a loss they would have stayed with it. Authors of behavioural finance outline this behaviour. This behaviour of these investors would have distorted the market conditions for other investors. Also, the herding effect would have been greater due to this. These factors would have led to the stock prices of a certain industry being vastly over priced. This would, therefore, cause the bubble. This bubble that has been created will, in turn, attract other investors. These investors will invest as they feel they are missing out on a good thing. This is another example of herding. This meant that when the bubble burst stock prices would have fell rapidly, causing investors to lose vast sums of money. This would cause them to pull out of the industry, which, in turn, causes the companies themselves to collapse. If it were not for irrational investment then investors might have pulled out earlier, before the collapse. This might have even meant that the collapse would not have happened. Other authors talk about some of the factors that cause investors to become irrational. On such author are Johnsson, Lindblom and P latan (2002). In their masters dissertation they talk about the various factors of irrationality. One of these is the observation that investors will hang on to losing shares longer than market theory dictates. They say that this is because they are waiting for the performance of the share to change for the better. This is referred to as loss aversion. This is an example of a psychological factor that is effecting the investment decision. Back to: Essay Examples Another psychological factor that affects investors, causing irrational behaviour is that of the feeling of regret. Authors argue that past bad decisions cause investors to feel regret and this alters their behaviour in such a way as to become irrational. Another factor that causes irrational behaviour is that of when the investor uses mental shortcuts in investment decisions. These shortcuts usually make investors choose the right decision but occasionally cause the investor to make the wrong decision. Optical illusions are a good example of how shortcuts can cause mistakes. A paper on www.undicoveredmanagers.com is one such paper that covers this point. Of course there are many authors who do not believe in the theory of behavioural finance. These authors argue that traditional financial theory can still be used to explain current market conditions. One such author is the person credited with the idea of the efficient market hypothesis, Eugene Fama. Fama (1998) argues that anomalies can be explained by traditional market theory. He argues that, apparent overreaction of stock prices to information is about as common as under-reaction and he suggests that this finding is consistent with the market efficiency hypothesis that the anomalies are chance events Other authors have argued that behavioural finance is only a study of individual investor behaviour. They argue that this theory has not been proven on a market wide scale. The tradition theories of finance have been. 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(2002) Behavioral Finance And the Change of Investor Behavior during and After the Speculative Bubble At the End of the 1990s Malkiel B. G. (1989) Is the stock market efficient? Science, v243 n4896 p1313(6) Samuelson P. (1965) Proof That Properly Anticipated Prices Fluctuate Randomly. Industrial Management Review, 6, pp. 41-49. Scholes M. (1972) The Market for Securities: Substitution Versus Price Pressureand the Effects of Information on Share Prices. Journal of Business, 45, pp. 179-211. Shefrin H. Beyond Greed and Fear. (1999) Understanding B ehavioral Finance and the Psychology of Investing. Harvard Business School Press Shleifer A. (2000) Inefficient Markets. An introduction to behavioural finance. Oxford university Press The Banker (2004) Cover feature: how much risk can you manage? Banks have a huge range of resources available to aid risk managers, but human nature can still result in a bad decision. Behavioural finance and prospect theory lifts the veil on poor investment judgement