KahnemanEveryone who has thought about it knows that behavioral biases of Kahneman and Tversky et. al. are completely contrived and not really biases at all but rules of thumb people have developed to help them take the path of least resistance or save time or expense or make a buck fast. But what are some real weaknesses or tendencies that people have that affect their behavior that could be useful to know?

I am thinking for example about what they say about men — that 3/4 of the way through a lecture, 80% of the men are thinking about romance etc.

I find the tendency of partner discord around Valentines Day a real effect, or the tendency of people to get angry before they've eaten ([(this is due for example to the influence of parasites such as p. gondi on people who have cats — it affects only 25% of the population, although everyone I know gets afflicted by this tendency, also including the much reduced personages at this office, as I noticed at noon today)]).

Also, the tendency to be joyful at having one's losses turn to break-even, or worse yet, the tendency when a loss turns into a small profit, to be so joyful that one can't take a reasonable profit, or much better the tendency, all too rare, to be complacent when one has a good profit and it turns into a fair profit.

The tendency also, for time to pass so quickly when one is involved in a flow activity (all too rare) and for it to drag on endlessly when one is — well, I will not complete that.

What are the real psych weaknesses of behavior that people have that should be quantified, rather than the ones that win you a Nobel Prize for being p. c. and that you can run on college students for a buck?

Alston Mabry says:

There is what I like to refer to as the "one-way street" bias: Whatever I do that disadvantages someone else is perfectly justified given the circumstances; but when some else's actions disadvantage me, it is an outrage.

The most obvious use in public discourse is to determine who is long and who is short on any given issue.

James Sogi reports:

I am reading one of the most fascinating books ever on game theory. The underlying idea is that people all act in their self interest, such that it can, and has been quantified. Game theory offers a good alternative model to the statistical model and avoids the problems inherent in statistical analysis of jumps and changing cycles. It is called the The Predictioneer's Game: Using the Logic of Brazen Self-Interest to See and Shape the Future, by Bruce De Mesquita. The main thing is to identify the true issues, not necessarily what people say they are.

Nick White avers:

The instant thing that comes to mind — perhaps my own bias — is taking risk around bonus seasons; or, more specifically, the months prior when the books are being tallied for the year. Be hard to isolate the signal from the noise, but easy to test?

I am likely to be far more cautious taking a needless big swing at something when the year has been good and I know the final reckoning is just 'round the corner.

Also — reminiscent of the Gambler's Ruin discussion in EdSpec — might one not find that particularly bad years for the market exhibit increased risk taking and greater daily ranges as those who are behind the curve swing for the fences while the edge is against them, to have one last desperate shot at the title?

On a micro level, I have found that those expecting a child or entering into a serious new life commitment (marriage, mortgage, new moonlighting venture, death of a relative) definitely change their attitudes toward risk. There may be some seasonality present in those events that could be tested vs the market?





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