Charles Pierce and William James tried to give consistency to a modern ‘risky’ world, moved away from mechanistic cause-effect laws to the ‘universe of probability’ and both also stressed emotions (abduction in Pierce equals optimism, creativity) and leap of faith by James.
Anticipatory emotions provide the momentum to decide, to act as rationally as possible, and reactions to outcomes are also emotional.
Cannot split emotions from rationality (practically) point is, emotions are unpredictable and uncontrollable, therefore play them down in public.
• People most readily accept that emotions arise in politics all the time
• Economics with exceptions Adam Smith, associates emotions with irrationality.
• Distinction is completely inconsistent with Keynesian uncertainty emotions revolutionary.
Example, USA; Alan Greenspan dour, pessimistic, yet celebrated dot.com boom ignore uncertainty in stock markets. Stockbrokers are as prone to error (in predictions) as Judges and surgeons, far more than weather forecasters.
Surveys on gut feelings and sweaty palms however ignore uncertainty.
Emotions of trust (for future gain) or fear of future loss arise because most ‘mistakes’ are due to the unknowable nature of the future and pretending that humans can rise above or use emotions in the modern hope for control.
Emotion leads to error investment analysis is a purely rational process.
There is a quote by W. Buffett that says.
“Be fearful when others are greedy and greedy only when others are fearful”. Traditional view between rationality and emotionalism.
- Professionals have superior control over emotions.
- Professionals determine past trends more accurately.
- Professionals extract future trends more reliably.
- Professionals less subject to overconfidence.
Perhaps. Perhaps all of these things are true.
What do you thinks?
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