Alan Greenspan discovers people are greedy.
October 9th 2008
My day is not starting out very well. This morning I read the following in the NYT TIMES business section : "Today, with the world caught in an economic tempest that Mr. Greenspan recently described as “the type of wrenching financial crisis that comes along only once in a century,” his faith in derivatives remains unshaken. The problem is not that the contracts failed, he says. Rather, the people using them got greedy. "
Duh!
Duh!
Duh!
People got greedy? Unbelievable. People got greedy. I can't believe it. And these were nice money people as well. My goodness Alice what happened? Investment bankers tried to make a lot of money? Startling. Oh, my what a surprise.
No kidding Alan. They are human beings. People get greedy when they see there's a possibility of making a great deal of money. Systems should not be built that are based on the assumption that people will not get greedy. Of course they will get greedy. I would. You would. It's human nature. It's Common Sense, not graduate school common sense, not Common Sense 101, it's not even Common Sense 1, it's sixth grade common sense.
We need to help people understand how human systems work. As Dan Arielly points out in his book, "Predictably Irrational", we act in irrational ways when certain conditions exist. If we keep on making economic decisions, based on the assumption that people are totally rationale, we're going to continue to build faulty systems.
Not to toot our own horn here, but simulations are one of the best ways to help people understand how people react when they are placed in systems with different reward structures, distribution of power, ethical norms, peer pressure and all of the other situations that make it difficult for people to be true to their rational selves.
My day is not starting out very well. This morning I read the following in the NYT TIMES business section : "Today, with the world caught in an economic tempest that Mr. Greenspan recently described as “the type of wrenching financial crisis that comes along only once in a century,” his faith in derivatives remains unshaken. The problem is not that the contracts failed, he says. Rather, the people using them got greedy. "
Duh!
Duh!
Duh!
People got greedy? Unbelievable. People got greedy. I can't believe it. And these were nice money people as well. My goodness Alice what happened? Investment bankers tried to make a lot of money? Startling. Oh, my what a surprise.
No kidding Alan. They are human beings. People get greedy when they see there's a possibility of making a great deal of money. Systems should not be built that are based on the assumption that people will not get greedy. Of course they will get greedy. I would. You would. It's human nature. It's Common Sense, not graduate school common sense, not Common Sense 101, it's not even Common Sense 1, it's sixth grade common sense.
We need to help people understand how human systems work. As Dan Arielly points out in his book, "Predictably Irrational", we act in irrational ways when certain conditions exist. If we keep on making economic decisions, based on the assumption that people are totally rationale, we're going to continue to build faulty systems.
Not to toot our own horn here, but simulations are one of the best ways to help people understand how people react when they are placed in systems with different reward structures, distribution of power, ethical norms, peer pressure and all of the other situations that make it difficult for people to be true to their rational selves.
posted by Garry at
11:18 AM
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