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Transferring cognitive talent across domains to reduce the disposition effect in investment.

ABSTRACT: We consider Theory of Mind (ToM), the ability to correctly predict the intentions of others. To an important degree, good ToM function requires abstraction from one's own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer good ToM function, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high scores on the social-cognitive dimension of ToM function. No such transfer is observed in subjects who score well only on the social-perceptual dimension of ToM function. Our findings open up a promising way to exploit cognitive talent in one domain in order to alleviate cognitive deficiencies elsewhere.

SUBMITTER: Rotaru K

PROVIDER: S-EPMC8630220 | biostudies-literature | 2021 Nov

REPOSITORIES: biostudies-literature

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Transferring cognitive talent across domains to reduce the disposition effect in investment.

Rotaru Kristian K Kalev Petko S PS Yadav Nitin N Bossaerts Peter P

Scientific reports 20211129 1

We consider Theory of Mind (ToM), the ability to correctly predict the intentions of others. To an important degree, good ToM function requires abstraction from one's own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investment ...[more]

PMID: 34845327

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Project description:BackgroundReducing health inequalities is an important policy objective but there is limited quantitative information about the impact of specific interventions.ObjectivesTo provide estimates of the impact of a range of interventions on health and health inequalities.Materials and methodsLiterature reviews were conducted to identify the best evidence linking interventions to mortality and hospital admissions. We examined interventions across the determinants of health: a 'living wage'; changes to benefits, taxation and employment; active travel; tobacco taxation; smoking cessation, alcohol brief interventions, and weight management services. A model was developed to estimate mortality and years of life lost (YLL) in intervention and comparison populations over a 20-year time period following interventions delivered only in the first year. We estimated changes in inequalities using the relative index of inequality (RII).ResultsIntroduction of a 'living wage' generated the largest beneficial health impact, with modest reductions in health inequalities. Benefits increases had modest positive impacts on health and health inequalities. Income tax increases had negative impacts on population health but reduced inequalities, while council tax increases worsened both health and health inequalities. Active travel increases had minimally positive effects on population health but widened health inequalities. Increases in employment reduced inequalities only when targeted to the most deprived groups. Tobacco taxation had modestly positive impacts on health but little impact on health inequalities. Alcohol brief interventions had modestly positive impacts on health and health inequalities only when strongly socially targeted, while smoking cessation and weight-reduction programmes had minimal impacts on health and health inequalities even when socially targeted.ConclusionsInterventions have markedly different effects on mortality, hospitalisations and inequalities. The most effective (and likely cost-effective) interventions for reducing inequalities were regulatory and tax options. Interventions focused on individual agency were much less likely to impact on inequalities, even when targeted at the most deprived communities.

Dataset Information

Transferring cognitive talent across domains to reduce the disposition effect in investment.

Publications

Transferring cognitive talent across domains to reduce the disposition effect in investment.

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