money it makes the world go round it
also makes us do irrational things
what if that's not entirely our fault
this neuroscientist is studying monkeys
to find out
you can't take monkey to you know wall
street and put it on the trading floor
that's kind of absurd but what you do
instead is we gradually train monkeys to
respond to shapes of different colors
that can mean you know buying stock
selling stock holding et cetera
and what we found is that monkeys in a
market where there's another monkey
will tend to follow what that other
monkey does so monkeys tend to follow
the herd
they copy each other and then they tend
to buy buy buy buy and they get into a
bubble and then
they lose everything which is like
really hilarious but also i think really
profound because in the exact same
task using the exact same stimuli these
shapes etc
and we have people play that game we see
the exact same thing happen
that's really interesting to us because
it tells us that
this behavior that we see in people and
that has enormous repercussions
it's there from a heritage that we share
with monkeys going back 25 million years
so how do we overcome millions of years
of evolution and resist our impulse to
follow the herd
this is your brain on money
[Music]
this is michael platt a professor of
neuroscience at the university of
pennsylvania
and he loves monkeys when i was a kid
i was fascinated by monkeys i would go
to the zoo
i'd watch monkeys for hours i just
couldn't stay away from it because they
were so
similar to us and i could see some of
the patterns of our own behavior in the
way that these monkeys reacted to each
other
and what we now understand from
neuroscience and humans
and and now in fact from my own lab
neuroscience in monkeys
is that this tendency to follow the herd
emerges from our social brain networks
the social brain network allows us to
perceive
other people and to make deductions
about what they're thinking and feeling
and those help guide our interactions
with them they help us to choose what to
do
it allows us to navigate our social
worlds
sometimes learning useful information
from others sometimes learning things
that actually
don't help us right if everybody's going
over
that way because there's water over
there then it actually makes complete
adaptive sense to follow them
but if everybody's you know buying
gamestop stock
you can get caught in a bubble market
and lose all of your money
that's not necessarily the most adaptive
thing to do
the ability to cooperate with and learn
from
other people is really the key component
of the human adaptive toolkit
to see just how adaptive we really are
let's look at the ash conformity
experiment
developed in the 50s by solomon ash
the premise is simple participants look
at a series of lines and determine which
of the three lines on the right
matches the line on the left
the catch is that four out of the five
participants here have been instructed
to give the wrong answer
everyone except astrid
[Music]
things begin uneventfully as everyone
gives their
uh responses a
a b
a but then something interesting happens
uh
looks like c yeah c
definitely c
[Music]
c the continued influence of the group
causes astrid to begin to doubt her own
eyes
like i'm familiar with the experiment
and i still doubted myself
everyone was so sure that
i wasn't anymore we see the same
behavior in the real world all the time
look at how we invest our money buy our
homes and even shop
when we see the crowd act in a certain
way our herd instinct
is to follow we are kind of naturally
sensitive to what other people are doing
because that provides
information that could be useful to us
that we didn't have to learn
on our own it just reflects the fact
that
most of us are really really dialed into
each other
and we're dialed in because we have this
social brain network that
is there to make us dialed into each
other
so we have this instinct and it's not
always useful
so how can we overcome it the way our
brains make decisions
is by iteratively collecting
evidence and the more evidence you
collect
the more likely you are to make the
right decision
so you know in thinking about hurting in
bubble markets
i think it's reasonable to suppose that
if we could
slow people down that would allow more
evidence to
accumulate and they're more likely to
make better decisions
and they'll feel better about it
afterwards
the human behavior that we see in these
financial markets is very deeply baked
in
it's not some psychological
irrationality or anything like that
it's been wired in by 25 million years
plus of evolution
it's part and parcel of being a primate
you