The field of behavioural finance has grown so popular over the last few years, now the man on the street is familiar with some of the terms describing biases that affect our financial decision making under conditions of uncertainty.
All this awareness in academia and the general population with so little being done to address these “errors” of behaviour is a source of frustration for me.
PsyQuation’s behavioural software endeavours to be the antidote to the evolutionary human way of dealing with heuristic behaviour; irrespective of whether it is driven by neuro-chemical or cognitive processes.
Some of the modern day giants in the field of Behavioural Finance are themselves becoming more proactive and share the PsyQuation vision of pro-action versus in-action and the belief we can avoid slavery of the self.
Nobel prize winners Akerlof and Shiller in their book “Phishing for Phools” describe the free market as not as innocent and productive as Adam Smith and his followers would lead us to believe; markets are inherently filled with tricks and traps and will “phish” us as “phools.”
Another hero of mine Prof Richard Thaler and his co-author Prof Cass Sunstein address the same issues of cognitive bias in their classic book “Nudge: Improving Decisions about Wealth, Health and Happiness”.
What I find so positive about these books and their authors world view is that no longer is the belief that we are victims to ourselves and there is nothing to be done about it. On the contrary the belief is to take this knowledge and develop positive Nudges that shape/influence our behaviour, to better suite our long term goals.
I have to be honest it is here where I am still debating the nature of what is acceptable as a Nudge. These esteemed Professors seek to introduce legislation to address the biases and in so doing nudge our way to a more productive future. As a libertarian I am not really in favour of legislation to manipulate a desired outcome.
No matter how good the trader is they will always be exposed to heuristic biases which at some point will hinder their performance. It is with this knowledge and our libertarian principles in mind that PsyQuation sets about Nudging positive behaviour for our traders. Our software ecosystem with its machine-learning alerting system is designed to nudge genuine change through what Professor Richard Thaler’s calls “paternal libertarianism” and we at PsyQuation call deeper knowledge.