Sunday, March 25, 2012

People want to be appreciate and feel self-worth. One approach they resort to is get other people to accept their own belief system.

As you can predict, however, they almost always fails.

The economics of self-image

People extract positive utility from behaviors consistent with their self-images, and negative utility if they do things that contradicts their belief.

So we see people with good self-image will generally outperform those without.

Rational Guilt

People who think a lot of how other people view them sometimes avoid making decision because that decision may incur guilt. Even they know the right decision to make, that procrastinate making it. That's the power of guilt.

Making decision right away beget expected guilt high enough that the cost at the present moment outweighs current benefit of making decision. But in the long run, the total benefit overwhelms the cost of guilt and procrastination. So the 'super ego' who maximizes the long run payoff would always make decision right away. The negative externality inherent in the principle-agent problem preclude making immediate decision.

It is the same case if the person may experience regret.

Monday, March 19, 2012

Rational stubbornness

Being stubborn and insistent on one's correctness might boost one's confidence. Sometimes verbal descriptions (or feelings) of one's experiences overwrote one's memories of experiences themselves, and one ended up remembering not what they had experienced but what they had said (felt) about what they experienced.

Monday, March 5, 2012

Herd behavior

There are a couple of reasons why herd behavior happens. The first is the social pressure of conformity. You probably know from experience that this can be a powerful force. This is because most people are very sociable and have a natural desire to be accepted by a group, rather than be branded as an outcast. Therefore, following the group is an ideal way of becoming a member.

The second reason is the common rationale that it's unlikely that such a large group could be wrong. After all, even if you are convinced that a particular idea or course or action is irrational or incorrect, you might still follow the herd, believing they know something that you don't. This is especially prevalent in situations in which an individual has very little experience.

http://www.investopedia.com/university/behavioral_finance/behavioral8.asp

Sunday, March 4, 2012

The Art of Scientific Investigation by W. I. B. Beveridge

The real and lasting pleasure in a discovery comes not so much from the accomplishment itself as from the possibility of using it as a stepping stone for fresh adventures.

Common sequence in an investigation:
a) The relevant literature is critically reviewed.
b) A thorough collection of field data or equivalent observational inquiry is conducted, and is supplemented if necessary by laboratory examination o specimens
c) Th information obtained is marshaled and correlated and the problem is defined and broken down into specific questions.
d) Intelligent guesses are made to answer he questions, as many hypotheses as possible being considered
e) Experiments are devised to test first the likeliest hypotheses bearing on the most crucial questions.

A crucial experiment is one which gives a result consistent with one hypothesis and inconsistent with another.

In the field of observation, chance favors only the prepared mind. -- Pasteur

On Chance
New knowledge very often has its origin in some quite unexpected observation or chance occurrence arising during an investigation. The importance of this factor in discovery should be fully appreciated and research workers ought deliberately to exploit it. Opportunities come more frequently to active bench workers and people who dabble in novel procedures. Interpreting the clue and realizing its possible significance requires knowledge without fixed ideas, imagination, scientific taste, and a habit of contemplating all unexplained observations.

The imaginative vision and faith in the ultimate success are indispensable, The pure rationalist has not place here.  -- Max Planck

Generalizations may be regarded as patterns in ideas.

In research, taste plays an important part in choosing profitable subjects for investigation, in recognizing promising clues, in intuition, in deciding on a course of action where there are few facts with which to reason, in discarding hypotheses that require too any modifications an in forming an opinion on new discoveries before the evidence is decisive.

As with other tastes, taste in science will only be found in people with a genuine love of science. Our taste derives from the summation of all that we have learnt from others, experienced and thought.

Most people do not realize how often opinions that are supposed to be based on reason are in fact but rationalizations of prejudice or subjective motives.There is a very considerable part of scientific thinking where there is not enough sound knowledge to allow of effective reasoning and here the judgment will inevitably be largely influenced by taste.

Often in research our thoughts and actions have to be guided by personal judgment based on scientific taste.

The origin of discoveries is beyond the reach of reason.

Effective observation involves noticing something and giving it significance by relating it to something else noticed or already known; thus it contains both a element of sense-perception and a mental element.

The mental resistance to new ideas is partly due to the fact that they have to displace established ideas. New facts are not usually accepted unless they can be correlated with the existing body of knowledge.

Persecution of great discoverers was due partly to mental resistance to new ideas and partly to the disturbance caused to the entrenched authority and vested interests, intellectual and material.

Work with some clear object in view but nevertheless keep alert for and seize any unexpected opportunities.