Friday, October 28, 2011

"Men in a mating frame of mind become less loss-averse"

From FuturePundit:
The willingness to take losses for larger gains depends on whether one has been primed to think about mating and also one's sex.
TEMPE, Ariz. – Could a passing mood influence your financial portfolio for decades to come? Can impulses you inherited from your cave-man ancestors influence your financial decisions in the modern world in ways that may have lifelong consequences?
In a word, yes.
Arizona State University researchers report new evidence that passing mood and deeply embedded human impulses can and do influence us as we make important financial decisions. The new findings, just released online by the American Psychological Association, suggest that our economic decisions change radically when either survival or reproduction is on our minds.
The old view of economic decision-making focuses on human beings as acting rational. In the last few years, cognitive psychologists have revolutionized economics by demonstrating that economic decisions are often irrational. One of the best-known examples of such irrationalities is the phenomenon of "loss aversion."
To a rational economist, $100 is worth exactly $100, whether it's in your pocket now or on the gambling table. But dozens of studies have demonstrated that the typical person places about twice as much psychological value on keeping the $100 bill in their wallet as they do when they place it on winning another $100.
From an evolutionary perspective the effects on men and women make sense. Though today we aren't in the environment for which we are evolutionarily adapted and as a result we are making decisions that are less than optional....MORE
I believe that last word should be "optimal".