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Tag Archives: behavioral economics

  • Podcast

    Tali Sharot: Overcoming The Optimism Bias

    How to wake society up to the big issues we collectively face
    by Adam Taggart

    Thursday, July 25, 2019, 5:23 PM

    10

    Are humans wired to deal with the kinds of existential threats facing society today? This is not just an intellectually-interesting metaphysical question. The answer may well determine whether our species makes it to the next century or not. As PeakProsperity.com readers know well, humans’ relentless pursuit of ‘ever more’ growth is finally slamming into the…

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  • Blog

    Making The Wrong Choices For The Wrong Reasons

    Why we're on a collision-course with crisis
    by Adam Taggart

    Saturday, July 23, 2016, 12:54 AM

    42

    Life is full of examples where folks make bad choices for noble reasons. Not every decision is a winner: sometimes you make the right call, sometimes you don't.

    • In 1962, Decca Records passed on signing a young new band because it thought that guitar-based groups were falling out of favor. That band was The Beatles.
    • Napolean Bonaparte calculated he could conquer Russia by assembling one of the largest invading forces the world has ever seen. He marched towards Moscow in the summer of 1812 with over 650,000 troops. Less than six months later, he retreated in failure, his forces decimated down to a mere 27,000 effective soldiers.
    • 1985 217 separate investors turned down an entrepreneur trying to raise the relatively modest sum of $1.6 million for his vision of transforming a daily routine shared by millions around the world. That company? Starbucks.  

    In these cases, those making the decision made what they felt was the best choice given the information available to them at the time. That's completely understandable and defensible. Fate is fickle, and no one is 100% right 100% of the time.

    But what's much harder to condone — and this is the focus of this article — is when people embrace the wrong decision even when they have ample evidence and comprehension that doing so runs counter to their welfare.

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  • Insider
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    The War On Cash Intensifies

    Negative interest rates. A ban on cash. Pick your poison.
    by Chris Martenson

    Tuesday, September 22, 2015, 1:45 AM

    72

    The central planners are setting the stage for the next round of officially sanctioned theft and this time they mean to assure that you have no way(s) of escaping.

    They’re coming for your cash. This is a risk that Charles Hughes Smith explored for us back in June in a very well-received analysis.

    Once a fringe idea, this concept is now being openly discussed and debated at the highest levels publicly. Which means it is being hotly discussed behind closed doors, and likely has been for a long time.

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  • Podcast

    Dan Ariely: Why The Next Market Downturn May Quickly Become A Full-Blown Panic

    The human factor has become extremely skittish
    by Adam Taggart

    Sunday, May 17, 2015, 3:37 PM

    24

    Behavioral science shows we are our own worst enemies in this story. In a realm where everything is so quantifiable, measurable and trackable, one would expect exceptionally good decision-making. But it's our human wiring, our proclivity for seeing things as we want them to be rather than as they truly are, that makes us vulnerable to influences we often aren't even conscious of. And the bad decisions — and bad outcomes — ensue.

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  • Insider
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    The Consequences Playbook

    What will happen as central banks lose control
    by Chris Martenson

    Thursday, January 22, 2015, 3:45 AM

    15

    Executive Summary

    • Desperate central banks are dangerous central banks
    • Why wealth disparity will get worse
    • The list of what comes next as central banks lose control
    • What you should do in advance

    If you have not yet read When This Ends, Everybody Gets Hurt available free to all readers, please click here to read it first.

    What’s really happened since 2008 is that central banks decided that a little more printing with the possibility of future pain was preferable to immediate pain.  Behavioral economics tells us that this is exactly the decision we should always expect from humans. History says as much, too.

    It’s just how people are wired. We’ll almost always take immediate gratification over deferred, and similarly choose to defer consequences into the future, especially if there’s even a ridiculously slight chance they won’t materialize.

    So instead of noting back in 2008 that it was unwise to have been borrowing at twice the rate of our income growth for the past several decades — which would have required a lot of very painful belt-tightening — the decision was made to ‘repair the credit markets’ which is code speak for: ‘keep doing the same thing that got us in trouble in the first place.’

    Also known as the ‘kick the can down the road’ strategy, the hoped-for saving grace was always a rapid resumption of organic economic growth. That’s how the central bankers rationalized their actions. They said that saving the banks and markets today was imperative, and that eventually growth would return, justifying all of the new debt layered on to paper-over the current problems.

    Of course, they never explained what would happen if that growth did not return. And that’s because the whole plan falls apart without really robust growth to pay for it all.

    And by ‘fall apart’ I mean utter wreckage of the bond and equity markets, along with massive institutional and sovereign defaults. That was always the risk, and now we’re at the point where…

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  • Podcast

    Dan Ariely: Why Humans Are Hard-Wired To Create Asset Bubbles

    Our evolutionary programming often works against us
    by Adam Taggart

    Saturday, February 15, 2014, 5:25 PM

    27

    Renown behavioral economist Dan Ariely explain why humans are biologically wired to make irrational decisions when money is involved. It's a case of our evolutionary wiring interfering with the decisions we face in a modern world very different from the one our ancestors adapted to.

    In this podcast, Chris and Dan explore the human cognitive triggers that have led us to our third major bubble in 15 years (tech stocks, housing, credit) and why our natural programming often works against our best interests. In certain cases, like the banking sector, bad decision-making has become so ingrained in our institutions that Ariely thinks the "clean slate" approach is our best option should we have the courage to deploy it:

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  • Blog

    The Return of Dan Ariely: The Survey Results Are In

    by Adam Taggart

    Monday, February 7, 2011, 7:32 PM

    0

    Nearly a month ago, friend-of-the-site and renowned behavioral economics researcher Dan Ariely invited our readers to take part in one of his experiments. Readers were asked to fill out a survey that asked questions about a hypothetical country and the manner in which they would prefer to see wealth distributed within it.

    Nearly one thousand of you completed the survey and the ensuing discussion on the site was animated, to say the least. Many railed against the injustice of confiscatory tax codes and the lack of social mobility proposed within the study.

    Well, the results are in, and Dan explains below what he was testing for, how the survey was structured (Surprise! Many of you saw different versions than your peers), and the conclusions you helped his team reach regarding people’s perception of wealth inequality. Suffice it to say, you’re an admirably fair-minded bunch.  Here are the results:

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  • Blog

    Your Chance to Advance Science

    by Adam Taggart

    Wednesday, January 12, 2011, 5:04 AM

    0

    Dan Ariely needs lab rats. 

    Our new friend, the renowned behavioral economics researcher, is conducting an experiment to better understand people’s perceptions around wealth inequality. A timely subject, as the wealth gap between rich and poor in many developed countries is now reaching all-time highs.

    Following Chris’ recent interview with him, Dan has put together a survey for the CM.com audience to fill out on this topic. Perhaps we’ll become one of the colorful studies Dan is famous for citing in his talks!

    If you’re game for it, take 10 minutes to fill out Dan’s survey. And remember, this is for posterity, so please be honest. (Can anyone cite that film reference?)

    Here’s a bit more background in Dan’s own words:

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  • Podcast

    Dan Ariely Decodes Why Humans Are Hard-Wired To Inflate

    by Adam Taggart

    Thursday, January 6, 2011, 5:03 AM

    15

    Looking back at the carnage created by the bursting of the credit bubble, it’s natural to scratch your head and ask “How did we ever let that happen?” Behavioral economics exists to answer questions like this.

    Last week Chris sat down with Dan Ariely, gallivanting behavioral-economics-researcher-extraordinaire, who is breathing new life into this previously obscure field of study. The resulting interview is full of fresh, non-intuitive insights and shines light on how the human brain is often hard-wired for irrational action when it comes to money.

    One of the key takeaways for us was how Dan’s research provides an empirical explanation for why inflation will likely win the day: our mental programming leads us to prefer behavior that favors it.

     

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  • Blog

    Dan Ariely Decodes Why Humans Are Hard-Wired To Inflate

    by Adam Taggart

    Thursday, January 6, 2011, 5:03 AM

    0

    Looking back at the carnage created by the bursting of the credit bubble, it’s natural to scratch your head and ask “How did we ever let that happen?”. Behavioral economics exists to answer questions like this.

    Last week Chris sat down with Dan Ariely, gallivanting behavioral-economics-researcher-extraordinaire, who is breathing new life into this previously obscure field of study. The resulting interview is full of fresh, non-intuitive insights and shines light on how the human brain is often hard-wired for irrational action when it comes to money.

    One of the key takeaways for us was how Dan’s research provides an empirical explanation for why inflation will likely win the day: our mental programming leads us to prefer behavior that favors it.

    Read More »