Yuki Sato - Appointed in AY2017
Participant Profile
Yuki Sato
Monetary Theory, Finance2001: Graduated from the Faculty of Economics, Keio University 2003: Master's degree from the same university 2005: MSc in Economics, University College London 2009: Visiting Research Fellow, Princeton University 2011: PhD in Economics, London School of Economics After serving as an Assistant Professor in the Department of Finance at the University of Lausanne and a researcher at the Swiss Finance Institute, assumed his current position in 2017. *Profile and position are as of the time of the interview.
Yuki Sato
Monetary Theory, Finance2001: Graduated from the Faculty of Economics, Keio University 2003: Master's degree from the same university 2005: MSc in Economics, University College London 2009: Visiting Research Fellow, Princeton University 2011: PhD in Economics, London School of Economics After serving as an Assistant Professor in the Department of Finance at the University of Lausanne and a researcher at the Swiss Finance Institute, assumed his current position in 2017. *Profile and position are as of the time of the interview.
Focusing on the "Human Element" of Financial Markets to Rationally Explain Seemingly Irrational Behavior
Research Theme and How I Came to It
I conduct theoretical research on financial markets. During my master's program, as I read several papers on finance, I was captivated by their intricate and fascinating mechanisms and decided to pursue the Doctoral Programs. At that time, I believe I was more drawn to the appeal of the theoretical models themselves—a feeling akin to creating and solving puzzles—than to the actual financial markets. However, witnessing the subprime crisis during my doctoral studies made me realize that the balance between theory and reality is both crucial and interesting.
The Appeal and Interest of My Research Theme
In real financial markets, financial professionals may try to take advantage of ordinary people, and professionals engage in strategic maneuvering to outwit one another. By focusing on this "human element," it is sometimes possible to rationally explain phenomena that at first glance appear irrational. For example, in real markets, complex financial assets that investors cannot understand are sometimes traded at abnormally high prices. Doesn't this seem irrational at first glance? If I were advised to purchase such an asset, I would say, "I don't like it because I can't understand it, so please lower the price." But in reality, the opposite is true. Behind this fact, it's possible that hedge funds are over-investing in complex assets to manipulate investor perceptions, thereby driving up prices. Furthermore, taking advantage of the fact that these assets can be sold at high prices, it even seems possible that engineers are deliberately making the assets more complex. I feel the joy of research when I can see such unexpected (and realistic) mechanisms at play.
A Message for Students
During your university years, through part-time jobs and leisure, I imagine you will come to face money in a more realistic way. You might compare those experiences with the knowledge gained in class and begin to question, "Economics is different from reality" (as I did). When that happens, think of it as an opportunity. Unlike high school, university is not a place to simply learn things passively, but a place to find what you want to learn and to create new knowledge yourself. Therefore, if you find a gap between reality and academia, I believe it means you have gained an exciting opportunity to bridge it yourself. The insights you gain from thinking things through, as well as the process of discussing with friends and faculty to get there, will be a great asset for your future.
(Interview conducted in December 2017)
*Profile and position are as of the time of the interview.