It is 2023 and of course, I have to return to one of my favourite topics, the investment behaviour of narcissists. Like a dog returning to its vomit, let’s look at a study by Tim Jaeger and Tina Steinorth from the University of Hamburg. They looked at the investment behaviour of narcissists and people who score highly on the dark triad (narcissism, psychopathy, and Machiavellianism). The interesting feature of their experiment is to ask people to play a game where they get a fixed endowment that they can either invest in a safe asset or in a risky asset. Whatever they have left after they invest in the safe and risky asset they can take home. But here is the trick: the safe asset in their experiment has a lower expected return than the safe asset. For example, if you invest $1 in a risky asset, you have a 10% chance of winning $9 and a 90% chance of winning nothing. Thus, the expected return of the risky asset is $0.9 while the safe asset pays $1 for every $1 invested.
On a similar topic, what would be the psychological profile of investors who knowingly (and intelligently) pursue high risk strategies or businesses? Would some of the great entrepreneurs or investors of our age score highly on measures of the dark triad?
Bitcoin is different to crypto as more low time preference people like the asset. I personally like a hedge against idiots (narcissists, psychopaths, and Machiavellians) blowing up the financial system due to reckless fiscal/monetary policy. Still might not pay off and great if it doesn't but that isn't how insurance works :)
On a similar topic, what would be the psychological profile of investors who knowingly (and intelligently) pursue high risk strategies or businesses? Would some of the great entrepreneurs or investors of our age score highly on measures of the dark triad?
Bitcoin is different to crypto as more low time preference people like the asset. I personally like a hedge against idiots (narcissists, psychopaths, and Machiavellians) blowing up the financial system due to reckless fiscal/monetary policy. Still might not pay off and great if it doesn't but that isn't how insurance works :)