To: MulhollandDrive who wrote (6416 ) 10/11/2002 4:06:03 PM From: X Y Zebra Read Replies (1) | Respond to Princeton professor Daniel Kahneman is unique in the long string of Nobel Prize winners in economics -- he is a psychologist. His path-breaking research was actually a collaborative effort with the late Amos Tversky, a renowned psychologist from Stanford who is generally credited as the father of behavioral finance/economics. More than 30 years ago, Tversky and Kahneman first started to question the wisdom of textbook theories of individual economic behavior. They conducted a series of controlled experiments, some of which were aimed at sampling investor responses to hypothetical and actual financial market situations. (The co-winner in this year’s Nobel Prize is Vernon Smith, who wrote the book on experimental economics). (*) feels to me like a vindication for the ridicule I received from my professor's sneering looks. HA !In my opinion, the combination of these two theories sends an unmistakable message: The carnage of a popped equity bubble spells a major adjustment for the saving-short American consumer. It’s just a matter of when. Theories often suffer from the standpoint of timing -- they do fine in predicting the endgame but are often lacking in pinpointing the moment of adjustment. That lesson is equally important today. (*) Needless to say, I do not buy much into the black magic of Psychotherapy or Psychiatrists... at best, I agree with Mencken's definition:
