Interesting article in the WSJ today.
People with certain kinds of brain damage may make better investment decisions. That is the conclusion of a new study offering some compelling evidence that mixing emotion with investing can lead to bad outcomes.
By linking brain science to investment behavior, researchers concluded that people with an impaired ability to experience emotions could actually make better financial decisions than other people under certain circumstances. The research is part of a fast-growing interdisciplinary field called "neuroeconomics" that explores the role biology plays in economic decision making, by combining insights from cognitive neuroscience, psychology and economics. The study was published last month in the journal Psychological Science, and was conducted by a team of researchers from Carnegie Mellon University, the Stanford Graduate School of Business and the University of Iowa.
The study demonstrates how neuroeconomics can offer insight into a question that has become a growing focus of economic inquiry: Why don't people always act in their own self-interest when they make economic decisions?
Though the field is still in its infancy, researchers hope neuroeconomics could someday have dozens of real world applications — like explaining how brain chemistry influences market phenomena such as bubble manias and investor panics. Wall Street executives already are paying attention to the findings, since it offers insight into what motivates investors.
Was the Buddha really an investment guru? All that talk about detachment…
Here's a million dollar product idea for you – a Transcranial Magnetic Stimulator that suppresses emotion to make you a better investor.