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The Mind of the Market

Evolutionary economics explains why irrational
financial choices were once rational
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Since 99 percent our evolutionary history was spent as hunter-gatherers living in small bands of a few dozen to a few hundred people, we evolved a psychology not always well equipped to reason our way around the modern world. What may seem like irrational behavior today may have actually been rational a hundred thousand years ago. Without an evolutionary perspective, the assumptions of Homo economicus — that “Economic Man” is rational, self-maximizing, and efficient in making choices — make no sense. Take economic profit versus psychological fairness as an example. (continue reading…)

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Why People Believe Weird Things About Money

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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Graphology Part 1

Graphology, or handwriting analysis, claims that personality characteristics such as introversion and extraversion can be inferred from the form and structure of letters, words, and sentences (introverts, for example, are said to write in smaller letters, extraverts in larger letters). Shermer puts graphology to the experimental test, showing that if you do not already know the personality characteristic you are looking for in the handwriting, graphology is no better than chance.

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Graphology Part 2

Graphology, or handwriting analysis, claims that personality characteristics such as introversion and extraversion can be inferred from the form and structure of letters, words, and sentences (introverts, for example, are said to write in smaller letters, extraverts in larger letters). Shermer puts graphology to the experimental test, showing that if you do not already know the personality characteristic you are looking for in the handwriting, graphology is no better than chance.

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Art of Con Games Part 1

The art of the con is as old as civilization, employing the skills of deception, misdirection, and the psychology of human greed and the desire to get something for nothing. In this episode Shermer employs a professional con artist to teach him the fine art of conning people.

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