I found this talk from TED to be very interesting.
If this guy is correct then it would indicate that stock, bond and securities markets cannot be unregulated, because they will result in unethical behavior. I have a few more comments about this video on my personal blog. But I'm interested in what you think.
Ryan, interesting video. I'm glad you posted it. A few thoughts:
ReplyDelete1. He discovers that most people cheat only a little. I believe this shows how most people do listen to their moral compass to some degree.
2. If you are going to write a policy, you have to expect small amounts of cheating will be rampant.
3. The reality seems to be that economics effect people more than just about anything. (I didn't say money). If you want people to be more moral you unfortunately have to incentivise it.
4. Did I mention that if you want people to behave a certain way you have to incentivise it in #3? :)
5. Groupthink is deadly. If you think the group is fine with cheating so will you.
6. I thought it was interesting that people are willing to cheat more if they work with things worth a certain amount of money but that isn't actually money. That does have major implications for the stock market for sure.
ReplyDeleteGame Theory!
ReplyDelete'Rock, Paper, Scissors: Game Theory in Everyday Life' Talks about cheaters (defectors) and how altruism in nature contributes to stability and equilibrium. The author states that after reading the book the reader will exclaim "Game Theory!" when it is observed in real life.
I think I've become the blogger's librarian. =:)
"I think I've become the blogger's librarian."
ReplyDeleteStan, you have no idea how helpful these comments are. I am very interested in game theory and have always wanted to read a good book on the subject. Thank you for pointing this out.
I am sure that unethical behavior is a minimum responsible for the crisis and I am not sure that the worst actors did all pay for their excesses actually ; that because it seems that some of them did know what was going to happen and did buy some gold for example with some money that they knew was not very valuable (you can study the value of gold since several years, it is quite strange).
ReplyDeleteGiven that many of the actors involved in the cheating were Congressmen and regulators, such as the Fed, what do we do when the cheaters are in bed with the cheaters?
ReplyDeletePerhaps the concept of allowing the market to correct itself, and to allow the cheaters to reap what they've sown, may be the ONLY long term solution. Part of the problem in this financial collapse was the regulators were friends with cheaters. Barney Frank supported and strongly encouraged Fannie Mae and Freddie Mac to make crazy loans. Regulators encouraged the creation of Mortgage Backed Securities and other difficult-to-understand securities. Many groups and people sought out the lesser regulated securities, which ended up being the riskier ones, as well; knowing government would bail everything out.
Without a real risk of failure, no one has a reason not to cheat. And when a government over-regulates, the cheaters simply move overseas, where they can still prey upon the stupid, without government intervention (except, of course, to bail them out).
If Bank of America were told it isn't too big to fail, perhaps the correction would have been tough, but it would quickly have fixed itself.
Laissez-faire all the way, man!
"Laissez-faire all the way, man!"
ReplyDeleteRyan, (the author of the post), would be proud of you rameumptom.
I actually would like to the the economy more Laissez-faire in most sectors, but I fear there is some, like health care, where Laissez-faire may not work the best. But, believe it or not, I think most economic sectors would benefit by a more Laissez-faire approach.
Even in Adam Smith (that I did read) there is some limits to "laissez-faire".
ReplyDelete