Panic is an overwhelming feeling of fear that can dominate our decision making. It typically begins with a significant and sudden change in circumstance. The outbreak of coronavirus has provided numerous examples of decisions that are seemingly fuelled by stress and uncertainty; from the bizarre stockpiling of toilet paper to the dramatic daily moves in equity and credit markets. From a financial market perspective discussion around the recent explosion in volatility often centres on changes to market structure, liquidity and leverage. But panic buying and selling is primarily a behavioural phenomenon – what are its main causes?
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