V. S. Ramachandran: Mirror Neurons, Anosognosia
Since atleast one reader/blogger seems to be interested in my psychology-related posts, I figure I’ll continue along those lines - have a look at the essays by V.S. Ramachandran at Edge.org.
Start with this one - MIRROR NEURONS and imitation learning as the driving force behind “the great leap forward” in human evolution - which posits that mirror neurons will do for psychology what DNA did for biology: they will provide a unifying framework and help explain a host of mental abilities that have hitherto remained mysterious and inaccessible to experiments. Also check out the talks he gave as part of the Reith Lectures - available as both audio and text.
How is this relevant to life & markets, you say? How about this:
Think of a military general in a war room, planning for a battle. He would ordinarily collect evidence from a large number of scouts, add it all up, and arrive at a decision on what to do next. Let’s say the information from his scouts led him to call for an attack the next morning. But just before the scheduled attack, imagine one more scout arrives and tells him that he has underestimated the enemy’s strength by a quarter. Even though that new information contradicts everything else he has been told, the general cannot afford to rethink the whole decision. Instead, he simply ignores the report from the new scout or tells him to get in line with what everybody else is thinking. He may even tell him to lie in order to preserve troop morale.
Replace “general” with “investor”, “attack” with “invest” and “scout” with “information source”. Most of us, once we have made an investment (or a decision to invest) tend to ignore any information that contradicts it while looking for information that confirms it - pretty much the opposite of what we should be doing!
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