2007-12-03

Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich by Jason Zweig (2007)

A somewhat entertaining read summarizing "scientific" findings on human behaviour, as related to the field of investment. It might be worthy to know, how our preprogrammed brain kicks in very quickly during various circumstances, and drive our risk avoidance, primitive pattern seeking, anticipation of winning (apparently not dissimilar to a narcotic high) herding instinct, framing of facts, disregarding odds, overconfidence in our skills and predictions, physiological changes related to gains and losses, and more. Some practical approaches are offered, but the author's oft offered conclusion, that we all would be better just investing in index funds, might be just a manifestation of herding in regards to opinions of financial writers'. With the understanding, that many of these behaviours would not change very quickly, it was surprising to see many of these findings were being detailed by researchers multiple decades ago (no new research since?), and in many cases based on limited sampling (almost being on the verge of statistically not valid).

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