Tag Archives: perception

Bizzaro World: The New Normal?

Occam’s Razor:   The simplest explanation (no matter how unusual) is usually the correct one.

Pattern recognition, by some accounts, is the very basis of human intelligence.  However complicated human thought might be, it’s hard to argue that, in most circumstances, we’re really pretty good at “connecting the dots” and, thus, making sense of what might, otherwise, just be chaotic noise.  This talent, however, can break down when either the signal-to-noise ration gets too low or, alternatively, when our experiential (or heuristic) bias simply over-rides the process.  Continue reading

Advertisements

Review: Priceless: The Myth of Fair Value (and How to Take Advantage of It)

William Poundstone’s “Priceless” (2010) is an interesting and useful read for anyone who’s curious about the arcane science of behavioral decision theory.  In application, this field of study is particularly useful in addressing questions regarding the both the psychology and, thus, the frequently debated “rationality of the market” (or lack thereof). 

As a fundamental economic concept, the psychological underpinnings of market behavior remains one of the least understood and, yet, most critical factors driving the business cycle,  and more often than not, public economic policy.  Continue reading