Creatures of Coherence: Why We're So Obsessed With Causation

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BogleMelon
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Creatures of Coherence: Why We're So Obsessed With Causation

Post by BogleMelon » Wed Dec 06, 2017 10:19 am

Bogle's, This is a more scientific article than a financial one. However, finance is not separated far away from science and human behavior..
I share the below article because I believe it is an important one for those who are following closely the financial news, and make personal financial and investing decisions based on it..
Nassim Taleb noted how ridiculous this is in his book The Black Swan. In the hours after former Iraqi dictator Saddam Hussein was captured on December 13, 2003, Bloomberg News blared the headline, "U.S. TREASURIES RISE; HUSSEIN CAPTURE MAY NOT CURB TERRORISM." Thirty minutes later, bond prices retreated and Bloomberg altered their headline: "U.S. TREASURIES FALL; HUSSEIN CAPTURE BOOSTS ALLURE OF RISKY ASSETS." A more correct headline might have been: "U.S. TREASURIES FLUCTUATE AS THEY ALWAYS DO; HUSSEIN CAPTURE HAS NOTHING TO DO WITH THEM WHATSOEVER," but that isn't what editors want to post, nor what people want to read.

"In fact, all the headlines do is satisfy our need for coherence: a large event is supposed to have consequences, and consequences need causes to explain them," Kahneman argues.
https://psmag.com/environment/creatures ... tion-55801
Excuse my English, it is my second language! | | "One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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Sandtrap
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Re: CREATURES OF COHERENCE: WHY WE'RE SO OBSESSED WITH CAUSATION

Post by Sandtrap » Wed Dec 06, 2017 11:06 am

Interesting article. Thanks for posting.

I doubt that most humans consciously intellectualize "causation", though yes, there is a subconscious need for coherence, albeit simplistically.

IMHO human's are by nature "reactive critters". Perhaps a greater percentage of the inhabitants of "Bogleheadville" are more inclined to "logically respond" but that is a different section of the greater part of the bell curve. Daily life is replete with examples. How often do we see ourselves or others "react" rather than "respond", let alone "respond" with deliberate and thoughtful logic. Simple.

Actionably, this vulnerability reinforces the strength of the Bogle forum: reminding others to "stay the course", "ignore the noise", "stop fidgeting with the allocations". . . . etc.

Although I do notice the visual "incoherence" created by an all "bold cap" heading within a long list of non-bold heading posts on the list. :shock:
mahalo
j :D
Last edited by Sandtrap on Wed Dec 06, 2017 11:11 am, edited 2 times in total.

garlandwhizzer
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Re: CREATURES OF COHERENCE: WHY WE'RE SO OBSESSED WITH CAUSATION

Post by garlandwhizzer » Wed Dec 06, 2017 11:10 am

Love the article. Thanks for posting, BogleMelon. Human minds desperately want to create theories that make sense out of noise, but in the end, much of it is just noise.

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BogleAlltheWay
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Re: CREATURES OF COHERENCE: WHY WE'RE SO OBSESSED WITH CAUSATION

Post by BogleAlltheWay » Wed Dec 06, 2017 11:11 am

That was interesting. The other thing to remember is that news organizations are trying to sell papers or nowadays clicks.

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