By
Sean Allocca
Financial Planning
October 25 2017

Can ‘financial therapy’ cure bad client behavior?

Advisors specialize in knowing every facet of their clients’ financial lives. Will they need to delve into their mental processes and emotional states as well?

Absolutely says Dan Egan, Betterment’s director of behavioral finance. With automated software digitizing many menial tasks — like rebalancing portfolios and utilizing tax-loss harvesting — the advisors’ value will hinge on dealing with complex human relationships, he says. More...

By Barry Ritholtz
Bloomberg View
October 20, 2017

Stick With Numbers When Judging Trump's Rally -- Anything else is just story-telling in the interest of scoring political points.

Whenever I write about anything with even a vague political component, I always get the strangest correspondence. Much of it is unpublishable and sometimes amusing, and usually worthy of nothing more than a Twitter block. And yet these missives offer something useful about one of my favorite subjects: Why our brains are not wired for finance. More...

By Chris Risdom
Behavioral Scientist
October 25, 2017

Scaling Nudges with Machine Learning

There is a particular tension at the heart of applied behavioral science: We make decisions based on our unique circumstances and context, and yet we also desire solutions that can help people make better decisions on a massive scale. When I talk about this conflict inside the walls of a bank (I’m head of behavioral design at Capital One), I often describe it as “math versus snowflake.” More...

MedicalXpress
October 19, 2017

The best hedge fund managers are not psychopaths or narcissists, according to new study

When it comes to financial investments, hedge fund managers higher in "dark triad" personality traits - psychopathy, narcissism, and Machiavellianism - perform more poorly than their peers, according to new personality psychology research. The difference is a little less than 1% annually compared to their peers, but with large investments over several years that slight underperformance can add up. The results appear in the journal Personality and Social Psychology Bulletin, published by the Society for Personality and Social Psychology. More...

By Richard Peterson, MD
CEO, MarketPsych LLC
October 18, 2017

The Last Supper, Sentiment Cycles, and Impermanence

 

A wave of emotion passed through the disciples - shock, confusion, sadness, fear. 

This moment is captured in Leonardo da Vinci's masterpiece, "The Last Supper." Da Vinci portrays the disciples' reactions as ripples, seen in the two clusters on each side of Jesus in the image above. 

Prior to the Last Supper, paintings were often portraits of emotionless dignitaries, bland landscapes, religious iconography, or historical battle scenes. Da Vinci put dynamic feeling and emotion - life and humanity - into this work. More...

By Jason Hreha
Medium
June 21, 2017

Most applied behavioral science projects are behavior amplification projects

How should we think about behavior change in light of our strong, biologically-determined predispositions?
To answer that, we first need to talk about some research I did with BJ Fogg.
Back in 2011, BJ Fogg and I came up with what we called “The Behavior Wizard” (great name, I know). It was based on our work on the “Behavior Grid” — which was a taxonomy of human behavior that we used to orient our thinking re: which behavior-change strategies would work best for specific types of behavior. More...

By James Saft
September 6, 2017

Saving Hurts, and So Do the Errors of Self-Invested Plans

A little thought experiment for retirement savers:

Pretend we are at the race track and I pick your pocket, take a 10-dollar bill, replace the wallet surreptitiously and then 'give' you the money with instructions to put the funds on a horse. Now pretend that I also instruct you to take another 10 dollars of your own money and make a second bet. More...

By Koen Smets
Medium

Selling your soul -- The trade-offs we don’t want to make (but believe others should)

Not much is known with any certainty about Johann Georg Faust. Wikipedia describes him as an alchemist, astrologer and magician, who was born in either 1466 or 1480, and who may even have been two different people. However, after his death in 1541, he became the subject of legend, immortalized by numerous writers including Christopher Marlowe and Goethe... Faust’s claim to fame was that he is assumed have sold his soul in exchange for unlimited knowledge and worldly pleasures. Read more...

By Erik Angner
Behavioral Scientist

We’re All Behavioral Economists Now

Today behavioral economist Richard Thaler was awarded the Nobel Prize in Economic Sciences 2017. This makes him at least the third person working on behavioral economics to win the prize, after Herbert Simon in 1978 and Daniel Kahneman in 2002. Behavioral economics has long defined itself, in part, in opposition to standard (neoclassical) economics. Read more...

By Christopher Robbins
FA Magazine

Do Parents Favor Boys When Saving For College?

A child’s gender may presage how his or her parents will save for college, a new survey says. Parents who only have boys as children are putting more emphasis on saving and funding college education than the parents of only girls, according to a national survey of parents of children aged 8 to 14 that was sponsored by Baltimore-based T. Rowe Price. Read more...