Psychopaths Are Better Traders, Scientists Say

Wednesday, September 21, 2005

Not making a killing in the markets? Prone to cut profits and let losses climb through the roof? Don't worry, this just means you are perfectly normal.
In the rare case that you are a constant winner in the markets - better consult your psychiatrist.
Scientists have found out that the emotionally impaired are more willing to gamble for high stakes and that people with brain damage may make good financial decisions, Reuters picked up a story first published in the London Times last Monday.
Oh, and better cover your back. Your boss might as well have climbed the career ladder for the same malfunction.
In a study of investors' behavior 41 people with normal IQs were asked to play a simple investment game. Fifteen of the group had suffered lesions on the areas of the brain that affect emotions.
The result was those with brain damage outperformed those without.
The scientists found emotions led some of the group to avoid risks even when the potential benefits far outweighed the losses, a phenomenon known as myopic loss aversion.
One of the researchers, Antione Bechara, an associate professor of neurology at the University of Iowa, said the best stock market investors might plausibly be called "functional psychopaths."
Fellow author, Baba Shiv of Stanford Graduate School of Business said many company chiefs and top lawyers may also show they share the same trait.
"Emotions serve an adaptive role in speeding up the decision-making process," said Shiv.
"However, there are circumstances in which a naturally occurring emotional response must be inhibited, so that a deliberate and potentially wiser decision can be made."
I feel much better now.


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