Really fun episode of Freakonomics Radio this week about how animals seem to exhibit rational market behavior. I think often we assume a role for cognition when similar outcomes can be observed without.
All students of marketing should listen to this piece from On the Media.
Nassim Taleb was a recent guest on EconTalk. He discussed his ideas on loss aversion, speficially that there is nothing irrational about loss aversion because avoiding total loss is a prerequisite for playing the game. He quotes Warren Buffet as saying, “in order to succeed, you must first survive.” He also discussed it in the context of mental accounting, suggesting that mental accounting is the rational way to think about investing. Only making risky investments with “house money” can protect from total loss. Moreover, these strategies naturally evolve because those who don’t adopt them go bust and are weeded out of the game.
Always provocative. Often scattered and hard to follow. Taleb presents interesting ideas that run counter to mainstream thinking.
Interesting Episode of EconTalk where Elizabeth Anderson makes the case that employment shares striking similarity with dictatorship. This perspective may help explain why representative governments (where workers do have a voice) introduce regulations that business leadership otherwise would not have an incentive to implement.
Psychologists often do not begin from a Bayesian perspective. I think we should do so more often.
Yes, Bayes’s Theorem.