Well, I am really curious how you could watch that, and not understand the ABCT because he explains it in a way an 11 year old could comprehend.
From now on when I answer your questions I won’t explain myself.
What logic should I be following? Mickalogic?
This.
I agree, but not everyone who touts behavioral economics is trying to justify using the government stepping in and correcting things. Also the term is rather broad, encompassing everything from “irrational exuberance” (which supposedly ‘explains’ business cycles) to the way in which investors systematically over and under react to certain kinds of news about individual companies.
The former is only useful insomuch as it describes the psychological characteristics of people caught up in a boom (a couple of examples: the “it could never go down” psychology that is in full effect during the boom, whereas normally people would be more willing to concede that prices could fall, and the fact that uses of certain words in newspaper articles, terms such as ‘bubbles’ and starting with the tech boom ‘irrational exuberance’ tend to increase exponentially until the popping of the bubble - a correlation that might be just chance but more likely reflects growing awareness of the bubble and its lack of sustainability).
The latter is extremely useful to value investors. There have been many studies done that show that companies that have low price to book value, price to earnings, price to cashflow, etc (“value” stocks in the sense made popular by Benjamin Graham and his students, including Warren Buffet) tend to go up more (more than what? Keep reading) from positive earnings surprises (earning more money than analysts expected), and tend to go down less from negative earnings surprises (earning less money than analysts expected). The opposite holds true (on average, of course) for companies with high price to book, earnings, and cashflow stocks.
But the idea that irrational exuberance is the cause of bubbles and that it should somehow be reigned in by our wise leaders in government? That’s bullshit. The psychological characteristics of the bubble are real, and they might help describe why particular sectors of an economy are inflated instead of others, but they are the symptoms of the bubble, not the cause. It does nothing to show how that inflating could have happened in the first place.
I’ve just been trying to read it. It was a painful process. I fear the book is too old fashioned, it uses all sorts of strange words and phrases I have to keep looking up three times per page. I got completely fed up when he said: "remember Spinoza’s dictum: Sane sicut lux se ipsam et tenebras manifestat, sic veritas norma sui et falsi est. " without giving an english translation!
Is there a more user friendly and modern AE book/article/lecture which will tell me why human behavior can not be modeled by computer?
Now you’re asking the right questions.
This is more Mises, but perhaps more precisely tuned to your inquiries
But this might be more up your alley
Cus you can’t use math to predict how humans will behave in an exact way. Going by incentives, you only say that “other things equal, you will get more/less of this action than you otherwise would have if such and such policy had not been enacted” or that sorta thing. There’s a few audio files in the media section that talk about praxeology and positivism.
It still feels rather like a rather old fashioned writing style 
I found one very important mistake on the second page. It says “Furthermore, the fact of his action implies that he has consciously chosen certain means to reach his goals. Since he wishes to attain these goals, they must be valuable to him”. While this may seem superficially to be self evident, it is actually rather too approximate. A truer version would be as follows: “Since he wishes to attain these goals, he must, at the time of making the action, be predicting that the consequences of his action will be valuable.”
The consequence of my truer variation, is that it is now clear that the amount of value a man can get from his actions is at least partly dependant on his powers of prediction. For some types of action (or purchase) the prediction is pretty easy. If I buy a candy (that I have tried many times before) with a view to consuming it immediately then I don’t need to be very skilled in my powers of prediction to get the expected value. However, if I purchase a long term investment, or purchase the services of an expensive lawyer (whom I’ve never used before), then I need to be far more skilled in my powers of prediction or I could end up with much less value (perhaps even negative) than I had hoped.
Which do you think is best?
Just keep reading.
Perhaps even better would be:
“Since he wishes to attain these goals, he must, at the time of making the action, be predicting that the consequences of his action will be the lead to the greatest value of any action available to him at the time.”
I found another clear error on the same page. I started skimming towards the end because the writing style was just too horrid. I feel unmotivated to read it more carefully given such blatant errors right at the start… unless you are going to tell me he corrects them later.
what?
“Furthermore, that a man acts implies that he believes action will make a difference; in other words, that he will prefer the state of affairs resulting from action to that from no action”.
Good… but no cigar… For example someone may choose to perform an action which most probably (in their own estimation) produces a small reduction in his overall wellbeing so long as there is a sufficient (even if perhaps small) chance that there will be a large increase in his wellbeing. For example buying a lottery ticket. Usually you end up poorer but occasionally you may end up richer.
Often the excitement of the process can be reward in and of itself, in which case maybe the price paid for the ticket was still worth it… but this is not always true. Many desperate people my make analogous types of bet for which the excitement part is sadly lacking.
If the two quotes I have given from the article are part of the foundations of AE then they had better stand up to scrutiny very well… but it appears they are rather approximate
are you seriously disputing that? you say you are but when i actually read your content
you dont.
so wtf?
oh, are you saying that people buy lottery tickets even though when they buy them they think that owning a ticket does not increase their chances of winning a lottery? that people that buy tickets do not think that buying tickets help them to achieve their ends at the time when they buy them?
what are you saying?
Or it’d seem your understanding of them is very shaky, to say the least.
This isn’t what I would expect from a PHD but Mises learned English as a second language. He is definitely no Hazlitt. Still I have found his writings to be very scholarly and beneficially to me both from an understanding standpoint and a vocabulary standpoint.
May I suggest rather than looking for grammatical errors you actually read and try to comprehend the content? Making sentence corrections gives us the appearance that your simply being cynical and desperately trying to find flaws to point fingers at. This won’t help you understand the concept of praxeology.
What has helped me on definitions is I use a Kindle and move my cursor over words I dont know. Maybe you should get one, or a Nook. Here are some quotes for you…
But to make a man act, uneasiness and the image of a more satisfactory state alone are not sufficient. A third condition is required: the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness. In the absence of this condition no action is feasible…
On Happyness
In colloquial speech we call a man “happy” who has succeeded in attaining his ends. A more adequate description of his state would be that he is happier than he was before…
There is no standard of greater or lesser satisfaction other than individual judgments of value, different for various people and for the same people at various times. What makes a man feel uneasy and less uneasy is established by him from the standard of his own will and judgement, from his personal and subjective valuation. Nobody is in a position to decree what should make a fellow man happier.
Human Action Part 1 Section 2 (Prereqs for Human Action)
You do realize that you are not contradicting the original quote? Can you really have such poor reading comprehension as to not realize that your example is perfectly consonant with the original? Where do you think the disagreement is? You must be taking an extremely narrow interpretation of the original content. That is your error, not ours.
Errrmmm… you cut off part of what I was quoting. I quoted “Furthermore, that a man acts implies that he believes action will make a difference; in other words, that he will prefer the state of affairs resulting from action to that from no action”.
No, I am not saying that.
Actually lottery tickets are not a very good example because for most people part of the reason they buy them is for the “thrill” of finding out if they have won or not. So when they lose, they are not sooo disappointed. They think, “heck, it was a thrill watching the lottery draw on the TV and I had that pleasure”. But sometimes people make long-odds bets out of desperation rather than for the thrill. When that happens then at the time of making the bet the person may know full well that the most likely outcome is that they will be just a little bit poorer, but they make the bet anyway because they feel that it may be “their only chance”. In those cases, when they find out they’ve lost, there is no “heck, it was a thrill watching the lottery draw on the TV”. Instead its “damn, I wish I hadn’t bought that lottery ticket/bet on that horse/invested all my money in my uncle’s company/whatever”.
Mick this is off topic but what school granted you a PHD?