Uber Irrational

Wet and Irrational

A few weeks ago a group of French taxi drivers attacked the US singer Courtney Love's car as she tried to get to Charles de Gaulle airport in Paris. As it turned out this wasn't a Franco-American cultural argument over the relative merits of Ms Love's brand of alternative rock, but a side-effect of an industrial dispute that has its origins in the complexity of behavioral economics.

In fact, at root, it's about whether you'd like to be able to find a cab in the rain in New York. 

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Can You Forecast Better than a Dart Throwing Chimp?

The fox knows many little things, but the hedgehog knows one big thing - Archilochus

Cover Story

Philip Tetlock has spent many years studying the ability of experts to predict important events in their sphere of interest and come to the not entirely astonishing conclusion that they aren't much good at it. Soviet experts, for instance, missed the possibility that the Soviet Union might stop existing. On the other hand, they're exceptionally good at promoting themselves: being wrong is no impediment to fame, it seems.

Tetlock has discovered that people fall into two groups that he labels 'hedgehogs' and 'foxes', Hedgehogs have one big idea and tend to interpret the world in terms of it. Foxes have lots of ideas and are more flexible in the face of change. Unsurprisingly foxes are better at predicting stuff; but does that make them better investors?

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Bitcoin Bugs’ Belief

Bitcoin Bugs

From time to time something odd happens to the gold price – it goes down. This is usually a shock to the advocates of anti-fiat money who’ve been squirreling away the shiny stuff against the inevitable day when nation states collapse. They get quite cross when they discover that the said nation states may in fact be flogging their gold at historically high prices and driving the price down. Apparently the thought that countries might resist collapsing hadn’t occurred to the gold bugs.

In the meantime we’re seen the rise of Bitcoin, one of a number of cryptocurrencies that offer freedom from central regulation. Bitcoin and its ilk isn’t backed by anything, which makes it more than ordinarily a punt on the perverse willingness of people to believe in ephemera. And that, of course, is simply another case of history repeating itself. Have we learned the lesson?

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Lost In Your Own Memories: Age And The Room Effect

Remember …

Old people, you may have noticed, have a much better recollection of past events than they have of current ones. Memory is a very odd thing; what we remember and what we don’t isn’t always entirely rational, and the lessons we learn from our memories aren’t always the ones we ought to.

For investors, who all too often rely on their unsupported memories for insight into what they should be doing, this opens up a world of potential dangers. Although, as it turns out, simply wandering from one room to another can be enough to ruin your portfolio.

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