The Importance of Positivism in the World of Finance
Introduction
According to Little (2005), philosophy of social science is a scholarly discipline that attempts to analyse the logic, methodology, modes of explanation of the social sciences, in which its studies include psychology, sociology, anthropology, history and economics. Social science provides understanding of everyday interactions of individuals and interactions among human society in social institutions. Providing prediction and explanation for human behaviour and its consequences are some of the main aims of social science (Rosenberg, 1988).
The purpose of this paper is to examine how philosophy of social science can help in explaining speculators’ behaviours. This paper is divided into five sections. It will begin by explaining the speculative behaviours of stock traders on lottery type of stocks, the probable data source and methodology. This will be followed by introducing the concept of positivism and identifying the reasons for selecting positivism. This paper will also provide some criticisms to positivism. Lastly, the paper ends with a summary.
Speculative Behaviours of the Stock Traders in Lottery Type of Stocks
My research will be mainly focus on the speculative behaviours of the stock traders, such as fund managers and retail speculators on lottery type of stocks. Speculation is different from investment, in which according to Peers (2003), On the one hand, speculation involves taking large amount of risks attempting to earn quick profit. Speculation is a game where expected return and risk are both indeterminate. As a result, speculators need to take relatively large amount of risk with respect to attempt to predict the future. A simple example of speculation is purchasing gold. Speculators might think that buying gold is a better use of money due to the inflation. Since gold depends more on inflationary rate and relies less on global economy, buy gold during period of financial crisis will help speculators to generate quick
According to Little (2005), philosophy of social science is a scholarly discipline that attempts to analyse the logic, methodology, modes of explanation of the social sciences, in which its studies include psychology, sociology, anthropology, history and economics. Social science provides understanding of everyday interactions of individuals and interactions among human society in social institutions. Providing prediction and explanation for human behaviour and its consequences are some of the main aims of social science (Rosenberg, 1988).
The purpose of this paper is to examine how philosophy of social science can help in explaining speculators’ behaviours. This paper is divided into five sections. It will begin by explaining the speculative behaviours of stock traders on lottery type of stocks, the probable data source and methodology. This will be followed by introducing the concept of positivism and identifying the reasons for selecting positivism. This paper will also provide some criticisms to positivism. Lastly, the paper ends with a summary.
Speculative Behaviours of the Stock Traders in Lottery Type of Stocks
My research will be mainly focus on the speculative behaviours of the stock traders, such as fund managers and retail speculators on lottery type of stocks. Speculation is different from investment, in which according to Peers (2003), On the one hand, speculation involves taking large amount of risks attempting to earn quick profit. Speculation is a game where expected return and risk are both indeterminate. As a result, speculators need to take relatively large amount of risk with respect to attempt to predict the future. A simple example of speculation is purchasing gold. Speculators might think that buying gold is a better use of money due to the inflation. Since gold depends more on inflationary rate and relies less on global economy, buy gold during period of financial crisis will help speculators to generate quick