Rationality
Confabulation
We often don’t know why we do the things we do, but we are quick to make up a reason we actually believe, even though its not true. Psychologists call this ‘Confabulation’. The falsification of memory in which people fill gaps in recall with fabrications that they believe to be facts. Confabulation is, for example, …
Emotion & Decision Making
When the outcomes of a decision are uncertain, emotions play a role in guiding it. Emotions are the tools we use to simplify the world into heuristics, or general rules of thumb, as they allow our brains to take shortcuts and approximate rational thinking. Fear and anxiety detect risky choices, this is why we need …
Naïve Diversification
Naive diversification is best described as a rough and, more or less, instinctive common sense division of a portfolio, without bothering with sophisticated mathematical models.