In recent years, I am finding myself migrating more firmly toward behavioralist views on finance and economics. Not that this view, in my mind, is contradictory to the classes of models and logic I am accustomed to. It is rather an additional enrichment of them, adding toward completeness.
With this in mind – here’s a fascinating new study.
How Near-Miss events Amplify or Attenuate Risky Decision Making, written by Catherine Tinsley, Robin Dillon and Matthew Cronin and published in April 2012 issue of Management Science studied the way people change their risk attitudes “in the aftermath of many natural and man-made disasters”.
full article at source: http://trueeconomics.blogspot.com/
These observations seems to be borne out by the behaviour of the Big Banks just look at the news coming from JP Morgan ,another big gamble gone wrong using credit derivatives and $2,000,000,000:00 losses ,nothing learned .The Banks are going to continue to gamble and make the same mistakes as long as they know the taxpayers will bail them out and they are too big to be allowed to go bust !
“Insanity: doing the same thing over and over again and expecting different results.”
- Albert Einstein
- Constantin Gurdgiev & Morgan Kelly – Clear thinking in a Mad Ireland (awakenlongford.wordpress.com)
- And Now For Something Special: “The J.P.Morgan Guide To Credit Derivatives” By Blythe Masters (zerohedge.com)
- The 2 Billion Dollar Loss By JP Morgan Is Just A Preview Of The Coming Collapse Of The Derivatives Market (theeconomiccollapseblog.com)