“There’s a lot of irrational behavior but what I think is applicable to Wall Street now is the lack of trust and the (resulting) feeling of revenge,” says Dan Ariely, behavioral economist at Duke Fuqua School Of Business. (He’s one of the foremost experts in behavioral economics.)
“When we experience betrayal we want to seek revenge. It’s a very primary motivation of behavior,” he adds. “And we’re willing to lose money to make those people who betrayed us lose more money.”
As you might guess Ariely doesn’t think the problem can be solved with government intervention.
“Unless we fix the betrayal of trust we won’t be dealing with the fundamental problem. I expect to see a long slow bleeding until we fix the trust issue.”
If you’re interested in hearing more check out Dan Ariely’s book “Predictably Irrational.”
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