杜克大学

Behavioral Finance

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We make thousands of decisions every day. Do I cross the road now, or wait for the oncoming truck to pass? Should I eat fries or a salad for lunch? How much should I tip the cab driver? We usually make these decisions with almost no thought, using what psychologists call “heuristics” – rules of thumb that enable us to navigate our lives. Without these mental shortcuts, we would be paralyzed by the multitude of daily choices. But in certain circumstances, these shortcuts lead to predictable errors – predictable, that is, if we know what to watch out for. Did you know, for example, that we are naturally biased towards selling investments that are doing well for us, but holding on to those that are doing poorly? Or that we often select sub-optimal insurance payment plans, and routinely purchase insurance that we don’t even need? And why do so many of us fail to enroll in our employer’s corporate retirement plans, even when the employer offers to match our contributions? Behavioral finance is the study of these and dozens of other financial decision-making errors that can be avoided, if we are familiar with the biases that cause them. In this course, we examine these predictable errors, and discover where we are most susceptible to them. This course is intended to guide participants towards better financial choices. Learn how to improve your spending, saving, and investing decisions for the future.

从本节课中

Week 2

Welcome to the second week. In this session, we will discover how our minds are inclined to distort probabilities, and either underestimate or overestimate the likelihood of certain outcomes. We’ll also learn about “heuristic-driven bias”: the tendency to use rules of thumb that simplify the process of making decisions, but can also lead to predictable errors. These biases negatively affect our decision-making far more than we might expect; especially when the outcome of the decision has great significance for us.

Probability Weighting4:19

Relative Probabilities1:45

与讲师见面

Emma Rasiel
Associate Chair and Professor
Economics

The weighting function tells us we overweight low probability events.

And later, we'll see that there are other situational factors

that cause us to overweight low probability events even more.

We underweight high probability events, especially events that are so

common that we don't hear about them much in the newspapers.

People die in car wrecks at a rate of around 50,000 a year in the US,

we don't really think about that.

Because sadly, but true.

Car wrecks are somewhat commonplace.

So we don't hear a lot about them in the media almost, because they happen a lot.

We tend to be less sensitive to changes and

probability in the middle of the range.

Moving from a 30% probability to a 40% doesn't affect this that much.

But moving from 0 to 10% or 90% to certainty,

those are much bigger impacts.

Let's just finish this with a couple of quick examples.

Catastrophe potential.

We really, really have an increased perception of risk for

activities that may injure or

kill a large number of people violently and immediately.

If we've seen an example of that in the past like I said earlier,

a lot of Americans switched to driving from flying after 9/11.

Because the immediacy, the drama, the horror of being in a plane or

imaging being in a plane was so great even though the probability after

9/11 that you were going to be killed on a flight was infinitely lower,

because security was raised so much.

People moved to cars, they didn't realize that what they were doing

was increasing the catastrophic potential of driving as a result.

Interestingly, people are less likely to be

subjectively affected by risks in which they

feel like they have some expertise from a financial perspective.

If I pick somebody or a mutual fund to manage my money and

I know the portfolio manager there, and he's a friend, and he's a good guy.

I might let him take more of my money to invest than I would with some random

portfolio manager I had never met.

What I'm doing there is assigning some expertise to

myself in picking a good guy to manage my money.

So it seems somehow, I'm more willing to take that risk.

Familiarity too, something that we're used to doing.

We don't tend to over assign risk to it.

So, I don't know.

Let's say, you're a surfer.

And you want to go surfing those really, really big waves in Australia where once

every ten years, they have some massive, massive waves out there.

If you are not a surfer, that would seem like the probability of a catastrophic

outcome from that would be absolutely huge.

But if you're an expert surfer, you know you can handle it.

It's really familiar environment to you.

It just doesn't seem that risky to you.

If anything, in fact, you might underweight the risk in that context.

So, a final example of where we might see people putting lower subjective

probability weight is when they choose to engage in a certain type of activity.

Imagine that you have voluntarily chosen to be part of some sort of medical trial,

simply because you know that it's for a drug that's important for

many people and you want to be part of helping make that happen.

So you're involved in a trial that actually, there is a small amount of

risk involved in receiving that medical product that's being tested.

But because you have volunteered to be engaged in this,

you're not excessively overweighting the risky probability,

because it's your choice to get involved in the first place.