ataraxic brokers: crack darers? [Re: Economics ...]

Dave Long dl@silcom.com
Tue, 30 Oct 2001 11:49:55 -0800


Kudos on Shirky for the following bits:
>   "Like bond traders and stockbrokers, foreign-currency traders are
>   paid to act rationally - to ignore the waves of emotion that consume
>   amateur investors. Yet all of the currency traders in the new study
>   showed a clear physiological response to what the markets did,
>   experiencing powerful surges - jumps in blood flow, sweating - with
>   every rally and reverse. A strong emotional reaction was clear in
>   regions far from the rational mind."

My first association with this quote was 
with two cardinal virtues, fortitude and
temperance.  Fortitude keeps us from any
drastic action with each reverse, and with 
every rally temperance does the same.[0]

With proper feedback, despite presence
of noise, equilibrium can be maintained
with only low-energy inputs; one of the
practical benefits of active philosophy
is supposed to be the ease in keeping a
set-point, as dictated by prudence and
justice (the remaining cardinal virtues).

Ataraxia seems to be the technical term
for successful virtue feedback loops in
the face of Fortune's uncertainties.
So, if the ancient philosophers had any
sort of clue, we should expect the wiser
traders to show more equanimity; a brief
look at the quoted article[1] reveals:

> But the researchers did find something surprising: After watching
> the results, they could gauge traders' experience level solely by
> how their bodies behaved as they worked.  Novice traders reacted
> strongly. Experienced ones displayed a more even[2] keel. 

So there *is* something learned which
improves response stability.  Could it
be simply that the rational mind is
"stronger" in the experienced traders?

One objection to that supposition comes
from warfare.  Soldiers are not known
(at least compared with mathematicians)
for pursuing a rational art, yet they
show the same effects of experience;
compare recruits (novice) with crack
(experienced) units.

An even stronger objection comes from
other mammals.  Police horses are not
known for rationality (despite Clever
Hans), yet equines also show the same
equanimity with experience; compare
green (novice) with made (experienced)
horses[3].   

Fear and greed may threaten rational
plans[4] but even the irrational can
neutralize them, if they are virtuous.

-Dave

[0] "Don't be excessively annoyed.
     Don't be excessively annoying."

[1] <http://www.boston.com/dailyglobe2/296/science/The_biology_of_irrational_exuberance_+.shtml>

[2]
> Lo said that he has been amazed at how strong an emotional link traders
> form with the market - and how clearly experience can change their
> response. He said he was demonstrating the equipment to a class when he
> saw one student exhibit the distinctive pattern of a more experienced
> trader. It turned out the student had traded bonds for several years.

[3] the Mafia supposedly refers to
"made men".  Hollywood, coincidence,
or etymological parallel?

[4] Portfolio Theory, Commander's
Intent, the human officer's, and
Fido, respectively