The false consensus effect is present in finance. You pick your friends, and you pick the people you talk to based on their willingness or their similarity to you. Who wants to be around people that don't agree with you. You have experienced it, "There is no one I know who thinks like that...". Hence, we have the problem of the false consensus effect. We often overestimate how much others share our beliefs. We project our view on others or at the least assume that our circle of beliefs is more widely held than reality.
Why wouldn't this occur in finance. We hire for the team. We go to the same clubs and events. We are often educated at the same institutions. We remember the negative feelings projected on us when we don't follow our crowd. We will then make decisions based on the belief that there will be comfort being in the crowd with others. We get self-affirmation and validation by being with others that have similar opinions.
The foundation of non-consensus investing is fighting the false consensus effect. However, it may be easier to just following a model. The validation for model only comes with being correct.
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