Monkeys Exhibit the Same Economic Irrationality As Us

grrlscientist writes "Laurie Santos is trying to find the roots of human irrationality by watching the way our primates make decisions. This video documents a clever series of experiments in 'monkeynomics' and shows that some of the stupid decisions we make are made by our primate relatives too."

Comments

Irrational Market Behavior

[catchblue22]

Many of the economic theories that our governments have been adhering to over the past few decades have as a core premise that overall, markets behave rationally. Specifically, the "Efficient Market Hypothesis", in which it is proposed that the price for a good or service ALWAYS reflects ALL available information, implicitly assumes that market actors are acting rationally. And the "Efficient Market Hypothesis" is at the core of most of the mind-blowing mathematical economic models that many of our society's decision makers use to make economic decisions. The question is: If humans naturally make irrational decisions because we are biologically predisposed to do so, then how can markets be assumed to behave rationally? There have been striking experiments done on seemingly rational MBA students in which they make staggeringly irrational economic decisions. The monkey experiments seem to reinforce our predisposition to act irrationally.

In other words, the above research points towards falsifying the primary economic ideology that has been used to govern America since Reagan. This is no small matter. It affects all of our lives. And yet, if you listen to Republicans lately, they are still calling for policies derived from these economic models, policies such as tax cuts for the rich, working towards a reduction in governmental economic power, so as to let the power of the private sector and the magical invisible hand of the market place work their economic miracles. Myself, I am more of a Keynsian. I think the market is useful, but it can run amok if not attended to by a government powerful enough to guide it towards the public good.

Here is an excellent episode of the TV series Nova called "Mind over Money", which lays out many of my arguments clearly. The video only streams to the US.

Re:Irrational Market Behavior

[toadlife]

FDRs policies did not get us out of the Great Depression (which was only called that in the US).

By the standard definition of a depression (a period of rapid economic contraction) the depression ended in 1933, as by that year the economy was growing at an inversely proportional rate to it's decline between 1929 and 1933. High unemployment still remained for many years, but news job can only be created so fast. 1929 was the peak of a giant credit bubble, which was similar in size to the credit bubble that burst in 2008. It's only logical that it took many years for jobs to recover, as much of the wealth right before the bubble burst was credit based, i.e. *fake*.

The current bubble collapse we're experiencing was caused by policies provided by Jimmy Carter and Bill Clinton (under a Republican congress). So at least there I agree with you.

Nonsense. Carter had nothing to do with it. The Gramm-Leach-Bliley Act of 1999 is primary catalyst of the 2008 credit bubble. Clinton is certainly responsible for signing it. Even Greenspan, one of the primary drivers behind the free-market mania of the 90's admits today that it was a giant mistake.

As the only /.er who actually watched the video...

[dollarwizard]

...here's my assesment:

First of all, you need to skip to minute 9 before you start getting any info. And if you read the book Super Freakonomics, you already know everything in the 20-minute video:

- Monkeys steal money from each other, as do humans.
- Monkeys are terrible savers, as are humans.
- Monkeys are poor calculators of risk/reward, as are humans. (She goes on for about 8 minutes belaboring this point.)

And the goal for us as humans is to use our logic to overcome our emotions. There, I have now saved you 20 minutes of your life!