Report on Psychology Group Meeting - Meeting, Friday, 16 September 2016

We met at our usual venue and welcomed a new member, Frances, who we hope will find it worthwhile to continue attending our meeting. Our theme as mentioned in the website reminder was to continue looking at the psychology of financial decision making in part by finishing watching an American TV documentary on the subject.

Initially we had a wide ranging discussion on the points made in the first half of our video which we watched last time. This had made it clear that there were fundamental differences between what market oriented economists believed drove financial decision making and what behavioural economists saw as the most important factors. The former group clearly think that enlightened self-interest is the basic driving force whilst the latter are convinced that complex emotional factors play an important part. Though economists have developed incredibly complex computer models of how economies supposedly behave psychologists appearing in our video clearly believe that these models are based on erroneous assumptions and this is why they fail to predict or explain catastrophic financial crashes from which most of us in some way suffer.

The second part of our video looked in part at the history of so called financial bubbles which clearly demonstrate just how bizarrely irrational and ultimately ruinous financial behaviour can become. It mentioned the “tulip bubble” of 16th century Holland and of course the “Great Crash” of 1929 before looking at the “Credit Crunch” of 2007-2008. What was clear was that those involved fail to fully recognise and act on the lessons that history tries to teach them. Psychologists today are still devising experiments and constructing coherent economic models in an attempt to convince sceptical governments and financial sectors that behavioural factors must be taken into account if we are to prevent disastrous financial crashes from recurring.

Having spent several meetings on the topic of decision making we decided that at our next meeting we would return to Dr David Eagleman’s series on the brain and look at his episode which explores how we as fundamentally social creatures depend on and interact with other people or to put it another way how our brains interact with other brains. That meeting will take place between 2 and 4pm on Friday the 21st October, at The Owl in Hambleton and I look forward to seeing you then.

John Moore – Group Leader
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