2020 AFA Presidential Address “Social Transmission Bias in Economics and Finance”

2020 AFA Presidential Address “Social Transmission Bias in Economics and Finance”

A transcript with integrated slides is available at https://ssrn.com/abstract=3513201
Slides are available at https://ssrn.com/abstract=3513210

Saturday, Jan. 4, 2020 5:30 PM - 7:00 PM (PST)

Chair: David Hirshleifer, University of California-Irvine

I discuss an intellectual revolution, *social economics and finance*: the study of the social processes that shape economic thinking and behavior. This emerging field recognizes that people observe and talk to each other. A key, underexploited building block of social economics and finance is *social transmission bias*: a systematic directional shift in signals or ideas in social transactions. I use five “fables” (models) to illustrate the novelty and scope of the transmission bias approach, and offer several emergent themes. For example, social transmission bias compounds recursively, which can help explain booms, bubbles, return anomalies, and swings in economic sentiment.