Monkeys Wearing Pants

October 25, 2012
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“But these facts remain: When taught to use money, a group of capuchin monkeys responded quite rationally to simple incentives; responded irrationally to risky gambles; failed to save; stole when they could; used money for food and, on occasion, sex. In other words, they behaved a good bit like the creature that most of Chen’s more traditional colleagues study: Homo sapiens.”

- Dubner and Levitt, Monkey Business (NY Times 2005)

JS comment:

As Barry Ritholtz has put it, many investors are little more than “monkeys wearing pants.”

Clinical research seems to bear this out in reverse — when it comes to money, monkeys tend to make the same mistakes investors do (and, amusingly, will engage in prostitution if given the chance).

The implication here is that many of the behaviors a trader justifies as intuitive — born of unrefined gut instinct — actually reside on the “pants-wearing monkey” level.

If you have sloppy habits that you tolerate, or go off instinct unvetted by methodological verification, your inner primate may be getting the better of you… good news being that traders, unlike monkeys, have the ability to shape and improve intuition through study and contemplation.

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