Oct 17, 2009

The rationalization of humans

Humans are not rational, i.e., they suck at making the right decisions. While behavioral economics suggest they should be nudged in the right direction by proper choice architecture, recent advances in psychology and neuroeconomics might now provide even better tools, like the Rationalizer.

"The device is an emotion-sensing system designed to help investors keep a cool head when buying and selling [as] day-traders who exhibit more intense emotional reactions have significantly worse trading results."

The bracelet measures changes in the electrical resistance of the skin which can be caused by various stimuli, like anger or elation and transmits it to the “EmoBowl”, which alerts you to stop trading if you’re too hyped!

Maybe this was dreamed up by freshwater economists whose rational expectations models may now become relevant.



ht: The Economist

1 comment:

TomasHozik said...

Humans are making irrational choices even without being "too hyped"!

Supposedly the bracelet is for man only, woman are more resistant to being affected by emotions. I would have expected it to be the other way around... :-)