Buzz about behavioural finance
Lots of behavioural finance conversations going on on the blogs today and yesterday. Chris Dillow of Stumbling and Mumbing replies to my proposal for governments to take into account cognitive bias while regulating. Simon Johnson of Baseline Scenario responds to a debate between Richard Thaler and Richard Posner about financial regulation. Alex Tabarrok from Marginal Revolution highlights the difficulty of fighting asset bubbles , even if you have overcome the challenge of identifying them . Kenneth Arrow (via Conor Clarke of The Atlantic) argues that behavioural economics doesn't predict anything . Update : A friend points out this letter in the FT from John Maule calling for behavioural approaches to be used more in regulation and investment decisions. I'd love to have time to engage in depth with all of these debates, but let me start with a couple of key points. Commenters on both Chris's and Simon's posts use a familiar argument to dissent from the idea of beh...