Archivio per 10 aprile 2012

10
Apr
12

Behavioral Economics For Dummies®

Via Scoop.itBounded Rationality and Beyond

Based on psychology and rooted in real-world examples, Behavioral Economics For Dummies offers the sort of insights designed to help investors avoid impulsive mistakes, companies understand the mec…

Via www.scribd.com

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10
Apr
12

Economyths: Ten Ways Economics Gets It Wrong

Via Scoop.itBounded Rationality and Beyond

From the inability of wealth to make us happier, to our catastrophic blindness to the credit crunch, Economyths reveals ten ways in which economics has failed us all.
Forecasters predicted a pros………..        

Economics is a mathematical representation of human behaviour, and like any mathematical model it is based on certain assumptions. I will argue, however, that in the case of economics the assumptions are so completely out of touch with reality that the result is a highly misleading caricature. The theory is less a science than an ideology. The reason why so many people are conned into thinking the assumptions reasonable is that they are based on ideas from areas like physics or engineering that are part of our 2,500-year scientific heritage dating back to the ancient Greeks. Superficially they have the look and feel of real science, but they are counterfeit coin. Each chapter of this book begins with one of the misconceptions behind orthodox economic theory. It then goes back into the history to see where the idea came from, explains how it affects our everyday life, finds out why it persists despite evidence to the contrary, and proposes how we can change or replace it.

Via www.scribd.com

10
Apr
12

How mindless is standard economics really? Schipper, Burkhard C (2009)

Via Scoop.itBounded Rationality and Beyond

One of the most influential ideas in the past 30 years is the Efficient Markets Hypothesis, the idea that market prices incorporate all information rationally and instantaneously. However, the emerging discipline of behavioral economics and finance has challenged this hypothesis, arguing that markets are not rational, but are driven by fear and greed instead. Recent research in the cognitive neurosciences suggests that these two perspectives are opposite sides of the same coin. In this article I propose a new framework that reconciles market efficiency with behavioral alternatives by applying the principles of evolution – competition, adaptation, and natural selection – to financial interactions. By extending Herbert Simon’s notion of “satisficing” with evolutionary dynamics, I argue that much of what behavioralists cite as counterexamples to economic rationality – loss aversion, overconfidence, overreaction, mental accounting, and other behavioral biases – are, in fact, consistent with an evolutionary model of individuals adapting to a changing environment via simple heuristics. Despite the qualitative nature of this new paradigm, the Adaptive Markets Hypothesis offers a number of surprisingly concrete implications for the practice of portfolio management.

Via mpra.ub.uni-muenchen.de

10
Apr
12

The Adaptive Markets Hypothesis: Market Efficiency from an Evolutionary Perspective by Andrew Lo :: SSRN

Via Scoop.itBounded Rationality and Beyond

One of the most influential ideas in the past 30 years is the Efficient Markets Hypothesis, the idea that market prices incorporate all information rationally and instantaneously. However, the emerging discipline of behavioral economics and finance has challenged this hypothesis, arguing that markets are not rational, but are driven by fear and greed instead. Recent research in the cognitive neurosciences suggests that these two perspectives are opposite sides of the same coin. In this article I propose a new framework that reconciles market efficiency with behavioral alternatives by applying the principles of evolution – competition, adaptation, and natural selection – to financial interactions. By extending Herbert Simon’s notion of “satisficing” with evolutionary dynamics, I argue that much of what behavioralists cite as counterexamples to economic rationality – loss aversion, overconfidence, overreaction, mental accounting, and other behavioral biases – are, in fact, consistent with an evolutionary model of individuals adapting to a changing environment via simple heuristics. Despite the qualitative nature of this new paradigm, the Adaptive Markets Hypothesis offers a number of surprisingly concrete implications for the practice of portfolio management.

Via papers.ssrn.com

10
Apr
12

When guidelines & heuristics are better than strict policy Cognitive Edge Network Blog

Via Scoop.itBounded Rationality and Beyond

Scetis an example of all the days of heuristic guidelines and principles are more effective blockers and articulated requirements often harmful.

Via cognitive-edge.com




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