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TMFHelical (98.80)

A Game for You - It's Related to Investor Psychology

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February 29, 2008 – Comments (6)

Are You Predicably Irrational?  Should you be??

Let's play the door game.

http://www.predictablyirrational.com/?page_id=117

 Yes, this is a psychological experiment which can be related to your investing habits should you be inclined to make the connection.  There are 2 parts to the game.

Tomorrow (or Sunday), I will post some commentary on what this means. Or you can poke about the website yourself (after you play).  I have not read the book, but will put it on my list since I love this stuff (and yes, I've read Zweig's latest).

Besides biotech, I really really enjoy behavioral investing theories.  Just fascinating stuff in my opinion.  I will always believe that 'how you invest' is far far more important that 'what you invest in'. 

One reason I am such a fan of CAPS is that I believe one can't help but learn lessons about themselves while 'playing'.  Not simply related to their skill levels at selecting stocks, but also about their mentality in making stock selections (patience, rationality, degree of diligence, risk levels, all of it).

Zz

P.S. - I won, but I read about the game before I played it.  I'd be curious to hear how a few scored on the two parts.

6 Comments – Post Your Own

#1) On February 29, 2008 at 11:08 AM, FleaBagger (29.67) wrote:

I didn't "switch doors when they were shrinking to keep my options open" as the conclusion said, but rather switched doors because I misunderstood the instructions to say that the doors had different point values, and I was trying to find the one with the best point value. Had I understood the instructions correctly, I would have just gone for the points in my American, competitive mien.

How do you win? I scored in the 2200's in the first one and 2400's in the second.

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#2) On February 29, 2008 at 12:12 PM, devoish (98.35) wrote:

I scored 1500 and switched 50% more often with shrinking doors. I scored 2000 the second game.

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#3) On February 29, 2008 at 12:12 PM, TMFHelical (98.80) wrote:

The game flawed for me in that I didn't initially understand why none of the doors gave me points in the first run.  So it took me awhile to get any points at all in the first game, which did not repeat in the second.  Still, I did better in the first game (but already knew what to avoid).

The book looks like a worthwhile read.

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#4) On February 29, 2008 at 12:22 PM, Zanibel17 (97.58) wrote:

I scored in the 2100's in the first round and the 2200's with the shrinking doors.  I opened a new door one less time when they started shrinking than when they remained the same size. 

Does this mean my convictions get stronger in the face of disappearing options?

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#5) On February 29, 2008 at 1:48 PM, TMFHelical (98.80) wrote:

The more I think about it, the more I find the game seriously flawed.  To many clicks are spent in the first game trying to understand how to gain score at all.

If the test were reversed i.e. no shrinking doors in the first play, I doubt the results would be anywhere near the same.  Would people switch doors, knowing that each time they do so it costs points?  Oh well, interesting stuff, but bad test for it IMO.

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#6) On February 29, 2008 at 8:12 PM, EScroogeJr (< 20) wrote:

I switched the doors 2 times in the first part because the instruction said that each door had a different distribution. In other words, for all I knew, door 1 could be offering numbers ranging from [1..100] and door 3 - from [1..1000]. So sticking to just one door could be a costly mistake, because if I got the average of 50 points per click as opposed to 500 points, two extra clicks would not be of any help. It was well worth it to lose these two clicks to ascertain that all 3 distributions were most likely  composed of two-digit numbers. Once it was clear to me, I never felt any urge to explore the other two doors even as they were shrinking.

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