I am not rational
Objectivism
After reading Behavioral Finance by Goldberg and Nitzsch, I concede:
The many psychological rumors in my mind rule my behavior. My motives are not always guided by maximizing profit, even if I try. I give my best, yet I make mistakes, some of which tend to repeat themselves systematically. I err often and repeatedly. I lack the discipline, self-control and capacity necessary for rational behaviour. Instead, I am possessed by moods. In some situations, I am more open to taking risks than is good for me. I lack the data to make informed decisions. In selecting and weighting data, I often apply criteria that is not rational, either intentionally or not. On any given day I am prone to judge a piece of information differently than I would on another day.
In spite of more transparency through increased availability of information, and in spite of more means to represent such information, my relative capicity to cope is shrinking. In spite of technical progress in this modern world, I am not more rational for it. Nothing has changed. I am driven by desires human beings were driven by centuries ago. Whenever I change course, I fail at truly understanding the full consequences, yet my heart may be fully comitted. My departures from rational behaviour (from the ideal of homo oeconomicus) occur daily. To believe that large moodswings or even panics are reserved to times of crisis is to deny the latency of such things to occur every day. My intuitive behaviour may at some point match rational behavior, at other points it may derail into madness. This is the theory.
Behavioral Finance by Goldberg and Nitzsch not only exposes our shortcomings from rational behavior. It offers the butt-shaking emotional human a chance to acknowledge his nature, and to take up reason as his ally.
Published: July 18, 2004
Tags
This is alexome.com by the hands of Alexander Schneider. It is dedicated
to his sideburns, and to his alone.
