As the stock and real estate markets rock and roll our economy and disrupt our investment futures, it is time to disengage our emotional brains and step back for a moment to allow our rational brains to catch up and decide what really is the right way to respond to the turbulence of today’s market disruptions.
In The Mind of the Market I integrate hundreds of findings from the new science of behavioral economics to demonstrate how we all make money mistakes. Armed with this knowledge the hope is that we can avoid such errors in financial judgment. Here are the top ten money mistakes that we all make and how to avoid them. (continue reading...)
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A new fMRI study debunks the myth that
we are rational-utility money maximizers
Imagine that your child’s private school tuition bill of $20,000 is due and the only source you have for paying it is the sale of some of your stock holdings. Fortunately, you got in on the great Google godsend and purchased 100 shares at $200 each, for a total investment of $20,000, and the stock is now at $400 a share. (continue reading…)
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The neuroscience of choice exposes the power of ideas
Have you ever watched a white rat choose between an 8 and 32 percent sucrose solution by pressing two different bars on variable-interval schedules of reinforcement? No? Lucky you. I devoted two years of what would otherwise have been a misspent youth to running choice experiments with rats in Skinner boxes for my master’s thesis on “Choice in Rats as a Function of Reinforcer Intensity and Quality.” Boys gone wild! (continue reading…)
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