
How to Save Ourselves From the Irrational Economy - nreece
http://discussionleader.hbsp.com/goldsmith/2008/11/dan_ariely_how_to_save_ourselv.html
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mixmax
Behavioral economics play a much larger role in macro economics than most
people believe, explaining such things as sudden drops and surges in share
prices that classical economics have serious problems with. Unfortunately, as
the article argues, much economic commentary by massmedia is stuck in the era
of classical economics.

If you want to learn more, and gain some insight into how these mechanisms
work I recommend watching Daniel Kahneman's 45 minute Nobel prize lecture from
2002:
[http://nobelprize.org/nobel_prizes/economics/laureates/2002/...](http://nobelprize.org/nobel_prizes/economics/laureates/2002/kahneman-
lecture.html)

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bsaunder
I think there's a more fundamental problem with any commentary (economic or
otherwise) by mass media. It hardly seems objective these days.

There's also a self-fulfilling prophecy problem with media coverage of
economic information. If you tell everyone things are getting bad, it would
seem rational that they would sell their assets (making things worse). If you
say there's no bottom in sight, not many people would feel like re-entering
the market.

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maurycy
Yes. This is a double-edged sword, though. The similar bubble happens if you
constantly read that some assets are going to rise infinitely (eg, real
estate).

See Soros' reflexivity.

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s_baar
The title was misleading. It's quite unfortunate that irrational choices can
seem appealing when the market is manipulated, and it is even more tragic when
it is done in the name of the American Dream and ends up wrecking families'
finances permanently.

~~~
bsaunder
Yeah, I've been getting a hunch that there's some significant market
manipulation going on over the past year. Particularly the strength in the
dollar and the weakness of gold.

