How the Brain Makes Up Its Mind

[Timmy]

My wife told me about an interview she heard on the radio today with Jonah Lehrer regarding his book The Decisive Moment: How the Brain Makes Up Its Mind.

The interview can be found and downloaded from here.

The interview is great food for thought for decision makers. The section on dopamine and the Iowa Gambling Task is, I think, directly applicable to traders, as is the section on deliberate Calm and metacognition.

The Iowa Gambling Task experiment is demonstrated from this website, instructions are shown in the screenshot (below).

From the Iowa Gambling Task article at Wikipedia:
"Most healthy participants sample cards from each deck, and after about 40 or 50 selections are fairly good at sticking to the good decks".

But get this (again, from the above cited Wikipedia article):
"Concurrent measurement of galvanic skin response shows that healthy participants show a "stress" reaction to hovering over the bad decks after only 10 trials, long before conscious sensation that the decks are bad." (Underlining is mine).

Anyone see potential application to trading decisions here (more reading and research needed, of course)?


Lehrer has a website (derr…), with articles etc., like this one on Deliberate Calm.

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[sam76]

matey that was pretty whack (or perhaps I just didn't understand it)

I clicked on all 4 to asertain risk then just continually clicked on the highest paying card for 46 clicks??

the card didn't change once???

100 bucks a pop each time


don't read anymore if you haven't done it





second one from left

 

[beerwm]

Deck 3 right...

win $50,
win $0,
repeat.

the other piles are all negative expectancy.

or am i missing something

 

[Timmy]

Sorry folks, I was unclear. I only gave the link to the experiment as good form, quoting sources etc. And the screenshot was to explain how the experiment worked.

By all means, do the experiment, but what is most interesting to me is the underlined section of the Wiki article and its implications for trading decision-making:

"Concurrent measurement of galvanic skin response shows that healthy participants show a "stress" reaction to hovering over the bad decks after only 10 trials, long before conscious sensation that the decks are bad." (Underlining is mine).