Fri 28 Apr 2006
An Investing test with people unable to Feel Emotions shows Emotions are bad for Investing
It is difficult to invest - one of the things is that emotions often comes in the way of the rational decision.
Quote: “There is growing evidence that emotion often stands in the way of making rational business decisions.
Last year, a team from Stanford University, Carnegie Mellon University and the University of Iowa looked at the investment decisions made by people who were unable to feel emotions because of brain lesions but who were otherwise normal. It then compared the decisions with those of people who did feel emotions.
The result? The people without emotions did a lot better.
“Investors are not behaving in their own best financial interest,” Baba Shiv, an associate professor of marketing at the Stanford Graduate School of Business and co-author of the study, said in a report on its results. “Something is going on that can’t be explained logically.”
In the end, it appears, we make bad calls because we’re human. “