NYT: The Biology of Bubble and Crash.

[Ema]

http://www.nytimes.com/2012/06/10/o...-of-bubble-and-crash.html?_r=1&pagewanted=all

 

[BEG]

"Understanding the effects of human biology on the markets should profoundly change how we see them, and their pathologies. At the moment, I fear we have the worst of both worlds — an unstable biology coupled with policies that encourage too much risk-taking during bubbles and too little during crashes, as well as a bonus scheme that penalizes prudent risk-taking. Nature and nurture conspire to create recurrent disasters. Risk management needs to dampen these biological waves, not amplify them."​

What an interesting article, Ema. Thanks for posting. My thoughts are what if we extended this behavioral/biological phenomina to other professions? The repercussions could be enormous. I noted that the researcher recommended a mixture of women and older men. ​

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[*GG*]

Is this only on economics?

 

[BEG]

Is this only on economics?

Nature and nurture? I don't think so. It's a about a physiological stress response which is applicable to many situations. In this case, it's applied to financial investors.