.Watch the video https://www.youtube.com/watch?v=CjBtyr2qxME (only 5 minutes). What I am interested in the part where he mentions that losses are much more devastating for us than gains are helpful. Using this video discuss the following question: what is the evolutionary reason why losses hurt more than gains help?Watch this 8 minute video on the disposition effect in trading https://www.youtube.com/watch?v=0B4RDwu2XjMWhat are some solutions for this problem according to the video?Harry Markowitz, the founder of modern portfolio theory, quote (in Lecture 2) where he says he invests 50 percent in stocks and 50 percent in bonds to prevent regret is amazing to me. Rather than following his own mathematical advice of modern portfolio theory to determine his optimal allocation of stocks and bonds, he instead relies on emotions to guide his decisions. He talks the talk but does not walk the walk in terms of investment decisions. Give me one example from your life where you see someone (or yourself) talk about passionately about doing one thing, but in their own life they do not do this (does not have to be in finance or economics). Then try to explain why this happens. 4. How are you guilty of the availability bias? 5. Take two people. An emergency room nurse dealing with coronavirus every day at work, and a Wall Street executive (who has not been around anyone who is sick). Using the availability bias, why might the nurse overestimate the likelihood of an average person getting the virus while the Wall Street executive might underestimate the likelihood of the average person getting the virus? What does this say about our ability to forecast?
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