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Understanding Context and Wetware Bias

Posted By Barry Ritholtz On November 3, 2009 @ 10:30 am In Psychology | Comments Disabled

Terrific out of context quote that is very applicable to investors and traders:

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“Dozens of studies have shown that witnesses’ memories of events often change when they are supplied with new contextual information. Itiel Dror, a cognitive psychologist who has done extensive research on eyewitness and expert testimony in criminal investigations, told me, “The mind is not a passive machine. Once you believe in something—once you expect something—it changes the way you perceive information and the way your memory recalls it.

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In the bull bear debate, think about all of the cognitive foibles and wetware errors we each bring tot he table in terms of processing news, data and information.

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Source:
Trial by Fire [1]
David Grann
New Yorker, September 7, 2009

http://www.newyorker.com/reporting/2009/09/07/090907fa_fact_grann


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[1] Trial by Fire: http://www.newyorker.com/reporting/2009/09/07/090907fa_fact_grann

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