On Fund Managers, Rats and Hermit Crabs
Reversion to Familiar Habits Under Stress
Hermit crabs rely on acquiring discarded shells for their protection and are constantly on the look-out for better shells. However, faced with environmental stress they prefer to stick with their old shell, however unsuitable, than risk moving to a new one[i].....MORE
Experiments with rats show that under stress habitual behaviour persists longer in the face of changed reward structures – the market conditions may have changed but stressed rats take longer to spot this than unstressed ones. In stressful conditions the more rigid ‘habit’ memory system is favoured over the more flexible ‘cognitive’ memory[ii].
As we learn more about the neuroscience of decision-making, cross-species research is starting to help us understand more about how humans think and decide. In our daily lives and at work we are faced with the need to navigate complex situations with limited cognitive resources. A major strategy that evolution has equipped us with (just like hermit crabs and rats) is the development of habitual responses. These can be quite complex behaviours. For example the first couple of journeys driving to a new workplace can involve a good deal of route-finding and thinking things through to achieve the goal of arriving at your intended destination. After sufficient repetition the journey becomes a habit. There has been a shift from goal directed cognition to habitual behaviour....
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