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Stocks — Science Tells us When to
Hold ’em & When to Fold ’em

written January 2008 | comments (7)
Two new sciences shed light on an old problem of financial risk

With the stock market off to its worst first week of the year in history, investors are scrambling to decide whether or not to get out of the market. In my new book, The Mind of the Market, I describe the problem this way: our decisions about buying or selling things we value are heavily weighted by three psychological phenomena: the endowment effect, the sunk cost fallacy, and loss aversion. Understanding these will help you decide what to do with your investments. (continue reading…)

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Why Candidates Really Get Ahead

written January 2008 | comments (4)
The new science of evolutionary economics explains why some candidates, like some products, get ahead in the marketplace

As the presidential candidates bounce from primary to primary, with some surging and others falling back, it is appropriate to ask if there is something going on here more than simply political preferences and perceived positions on issues. There is. In my latest book, The Mind of the Market, I discuss a phenomenon called the Matthew Effect. It is a disturbing disruption of what we think of as democratic fairness. Here’s how it works. (continue reading…)

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Why People Believe Weird Things About Money

written January 2008 | comments (67)

Would you rather earn $50,000 a year while other people make $25,000, or would you rather earn $100,000 a year while other people get $250,000? Assume for the moment that prices of goods and services will stay the same.

Surprisingly — stunningly, in fact — research shows that the majority of people select the first option; they would rather make twice as much as others even if that meant earning half as much as they could otherwise have. How irrational is that?

This result is one among thousands of experiments in behavioral economics, neuroeconomics and evolutionary economics conclusively demonstrating that we are every bit as irrational when it comes to money as we are in most other aspects of our lives. In this case, relative social ranking trumps absolute financial status. Here’s a related thought experiment. Would you rather be A or B? (continue reading…)

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A License to Secular Parenthood

written September 2007 | comments (8)

In the 1989 Ron Howard film, Parenthood, the Keanu Reeves’ character, Tod Higgins, a wild-eyed young man trying to find his way in life after being raised by a single mom, bemoans to his future mother-in-law: “You know, Mrs. Buckman, you need a license to buy a dog, to drive a car — hell, you even need a license to catch a fish. But they’ll let any butt-reaming asshole be a father.” (continue reading…)

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God is Only a Theory

written July 2007 | comments (31)

I have given much thought to the creationists’ demand that evolution be stricken from public school science classes, or that it be taught side-by-side with creationism because “evolution is only a theory” and since “no one was there to witness the creation” we cannot say for sure what really happened. (continue reading…)

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