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Behavioral Economics

A tip of the hat to Dr. Sam Rock for this article on Behavioral Economics. 

This is what socionomics is all about. This article addresses the herding instinct  meaning we tend to follow the crowd, oh that the crowd was headed in the right direction! that is what Obama is trying to do, head the crowd in the right direction. 

Expect this material to be on future exams in class, does that get your attention?  It is clear that all these quant models about discounting cash flow to determine price are just academic jargon, the truth is that people follow the crowd and the trend, till it changes, just look at any chart of stock prices. 

Consider 

Dow 12,000 to 7,500 to 14,000 to 6,800 from 2000 to 2009, is that rational price discounting of future cash flows, hardly!

Now get reading. 
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3 responses to “Behavioral Economics”

  1. Kristin Avatar
    Kristin

    Good article, lots of great thoughts.

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  2. Austin Avatar
    Austin

    Frightening. This article was written in full left-wing/statist arrogance, justifying their ultimate goal of running a socialist utopia based upon the stupidity and laziness of the hoi polloi. This article reflects how the Left/Intellectuals really view the U.S. The Left sees the common man as the “great unwashed” and “too stupid to make good decisions for themselves”. Therefore, they couch their nanny-state proposals as suggestions/nudges as to how to live. What they are really doing is preparing to ram their marxist agenda down our collective throats with the goal of making it next to impossible to get out of the handcuffs that they are about to put on our wrists. This article reflects nothing more than Trojan Horse Marxism.

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  3. Dennis Elam Avatar
    Dennis Elam

    Well yeah,

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