Sep

16

 There have long been debates on whether people are rational or biased and irrational. Works by Tversky, Kahneman and et al seem to have directed our view toward the latter. But which view is really correct? Are we admirably rational in our choices, as the classical economists assume, or are we hopelessly irrational, as the behavioral economists claim? The author of this article "Sex, Murder and the Meaning of Life: the evolved wisdom behind our seemingly stupid decisions" is contending an alternative view that "our decisions are in fact biased, but in ways that reflect an evolutionary Deep Rationality".

As this would fundamentally affect our way of trading, I really would love to hear Dailyspecs' comments.

In addition, does the trading community today mainly believe that people are rational or biased and irrational? To your understanding, is there any view that dominates the trading community at the moment?


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  1. Stefan Martinek on September 16, 2013 7:43 pm

    This is not a first professor (article “Sex, Murder and the Meaning of Life”) claiming that irrationality can be rational, and introducing 3rd ways which could save old theories or eliminate conflicts. How irrational are we? In my view it is a function of trading drawdowns — from certain point losses do not matter and most stoics turn into gamblers regardless beliefs or intentions.

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