Emotions are not a malfunction of the economy but its essence. Why do failed strategies get repeated, and why do we jump in at the peak of a bubble?
"The paradox of economics, swayed by emotions" has been published. This book analyzes how human emotions and behaviors cause market fluctuations from the perspective of behavioral economics, rather than viewing economics as a realm of rationality.
Traditional economics does not treat irrational elements as variables. However, this book highlights emotions, cognitive biases, and psychological errors discussed in behavioral economics as essential components that disrupt the nature of the economy and make humans, human.
In particular, it illustrates how irrational elements influence decision-making based on rich examples occurring in the real economy and financial markets.
The phenomena of averaging down during declines in Samsung Electronics' stock price, investor sentiment chasing short-term profits over startup visions, the resilience to the depreciating yen affecting the Japanese economy, and controversies over banning short selling were reinterpreted within the framework of behavioral economics. Beyond simply explaining concepts, it unfolds their meanings in ways that directly impact our lives and assets.
The book also covers the K-economy. South Korea is facing the triple burden of high exchange rates, high inflation, and high interest rates, along with structural low growth issues. The author warns that it is confronted by a "perfect storm" due to overlapping risks such as the weakening competitiveness of semiconductors and traditional manufacturing, and the depletion risk of the National Pension Service.
Currently, the South Korean economy is facing the Korea discount and the structural limitations of capital markets. Countless individual investors enter the market believing in their dreams. However, what awaits them are false disclosures, zombie companies, and only governance tricks.
The author does not merely criticize this reality but offers a comparative analysis of alternative exchanges in Japan, the U.S., and Europe, as well as the systems for eliminating marginal businesses, suggesting directions for a healthy capital market and the South Korean economy.