Comments on: The Prospects for Homo economicus

By: Christopher Alexander

Christopher Alexander — Wed, 09 Apr 2008 20:08:15 +0000

I think there is more than one reasoning fallacy going on here. It is not true that selling the Ford stock is the “correct decision”. Past performance does not predict future results. Google could start going down, or Ford start going up, at any time. There is no simple formula to beat the stock market. Based on the limited information presented, both decisions are equally correct.

By: ray

ray — Sat, 29 Mar 2008 14:16:30 +0000

Could this result be due to the fact that from an evolutionary perspective, ‘winning’ is usually harmless, whereas ‘losing’ may take you out of the gene pool?

By: Becknerized

Becknerized — Thu, 27 Mar 2008 18:01:13 +0000

Fascinating, but not necessarily unreasonable. It’s considerably harder to gain, say, $5000, when you have $10,000 to invest, than it would be to gain the same amount by investing $100,000. This rule of diminishing leverage makes loss aversion quite logical in the abstract. It follows that the closer any potential loss brings the subject to the point of zero leverage (no expendable assets to gamble), the more loss averse they will be. Is this borne out in the study?

But I’m more interested in this study’s implications about free will and determinism.

By: Gerard Lemay

Gerard Lemay — Thu, 27 Mar 2008 17:52:58 +0000

How does one reconcile your risk aversion
conclusion with the notion, which I believe to
be true, that the promise of reward is a
better motivator than the threat of
punishment?

By: Jacob Jaffe

Jacob Jaffe — Thu, 27 Mar 2008 15:51:04 +0000

As a psychologist, I find similar processes in the psychological realm, which determine peoples’ emotional and behavioral choices.
I find your articles informative and thought provoking and look forward to receiving them.