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    nmw 20:11:02 on 2016/12/03 Permalink
    Tags: , , , irrationality, , , , rational behavior, rational expectation, rational expectations, , ,   

    The Irrationality of Irrationality 

    When you let the word “irrational” roll off your tongue, you do a very irrational thing: You specify something that doesn’t exist. It is very much like trying do describe a vaccum (not the cleaner, but rather the contents of emptiness).

    These days, it is very popular and a big hit to argue that people are economically motivated by irrational behaviors. That is also sort of like saying “light is dark”.

    Arguing with such nonsense is an exercise in futility. Just because someone can’t explain something does not mean there is no explanation for it. Besides that, I challenge anyone to give an adequately precise definition of the term “irrational”. In my opinion, the fact that a brain is in a living state means that there is some kind of rationalization going on. It may seem odd, but mainly if you are unfamiliar with odd things, odd thought, odd behavior and such.

    Let me give you an example. There’s a guy named Dan Ariely who maintains to be an expert on irrationality. I’ve watched some of his presentations, and I’ve observed that he actually seems to be jiving people: He says he talks about irrational behavior, but actually what he is talking about behavior that simply doesn’t conform to the laws of economics commonly taught in academia. For example, in one talk a paid attention to, he mentioned some law which basically said that if someone prefers A to B and also prefers B to c, it would be irrational to prefer C to A. What nonsense! This would be like saying that if someone likes ketchup more than relish, they would do something like drink a whole bottle of ketchup right out of the bottle. My hunch is that before someone had drunk less than half the bottle, they would no longer go near the ketchup for at least a week. Would that be irrational?

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    feedwordpress 16:58:04 on 2014/02/20 Permalink
    Tags: , , , , , irrationality, , , , , , ,   

    Life Mashups: Business + Love 

    Yesterday’s acquisition of WhatsApp by Facebook (and the subsequent reporting about the 19 billion dollar deal) has underscored something I have been thinking about a lot lately.

    Most people have 2 distinctly separated compartments in which they live out their lives: work and play, or maybe they call it business and family… — they have career goals and life goals. Very few people talk about enthusiasm or love, but such passions permeate every minute of every day.

    People are very happy loving others irrationally, but when it’s a matter of business, work, jobs, etc. then they expect mathematically precise logical analysis (however: such expectations are usually relaxed at the executive level — anyone who asks a CEO “why?” can expect to be unemployed in short shrift).

    As “tech companies” such as Facebook acquire companies with huge databases of highly irrational and often incoherent data, the question of “why?” — and also of “how?” (as in: “how to make sense of this mixed-up confusion?”) — poses itself.

    Another question that could be asked, though, is: Why do we separate and compartmentalize our lives this way at all? Yet I would advise investors not to hold their breath waiting for an answer to that one. ;)

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