Wednesday, March 19, 2008

The Mind of the Market

Scientific American has an online article explaining why irrational financial choices were once rational. The article has been written by Michael Shermer.
"Because 99 percent of our evolutionary history was spent as hunter-gatherers living in small bands of a few dozen to a few hundred people, we evolved a psychology not always well equipped to reason our way around the modern world. What may seem like irrational behavior today may have actually been rational 100,000 years ago. Without an evolutionary perspective, the assumptions of Homo economicus—that “Economic Man” is rational, self-maximizing and efficient in making choices—make no sense. Take economic profit versus psychological fairness as an example."
Interesting..ain't it?

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