This won't come as a shock to readers of WSO, but it turns out primates (in this case rhesus macaques) can be taught economics, develop their own risk tolerances, and display human-like decision making based on their own level of abundance or scarcity. In other words, there are monkey gamblers and monkey minimum-wagers, and they divide themselves into economic classes in much the same way humans do.
Wealthy monkeys, researchers found, generally took greater risks than poor monkeys. As a macaque became more dehydrated, it became more likely to choose the safe option. A wealthy macaque was more likely to chance getting no water at all for the possibility of getting a lot of it. Taken as a whole, the monkeys were slightly risk-averse; they were a bit more likely to choose the safe option on average.
Maybe I'm just a big nerd, but I find this stuff fascinating. I find it fascinating because it potentially tells a story that spans the entirety of the animal kingdom (at least at the upper levels) and adds to the nature vs. nurture debate. Perhaps as humans, we're not so special after all.
Now, it could all be based upon the familial link we share with primates, and this study tends to bear that out. But I'm certain similar patterns exist among canines and felines, as well as any other social species.
What's most interesting to me is the risk profiles shared by wealthy humans and primates (and, conversely, those of the poor). Operating from a position of abundance allows one to put oneself in the path of greater opportunity, even though that comes with some risk. Likewise, operating from a place of scarcity tends to make one risk averse for some reason, even though it stands to reason that the opposite approach would be more appropriate.
“The monkeys… seem to share human risk preferences. They were slightly risk averse and we know that humans would behave similarly in these experimental conditions,” Agnieszka Tymula of the University of Sydney’s School of Economics, one of the researchers, told Phys.org. ”Understanding the biological mechanisms underlying risky behaviours that evolved around satiety may provide unique insights about decision-making and consumption wealth.”
So what do you guys think? Is it all just monkey hogwash? Or are economics prevalent across the whole animal kingdom? Is there a monkey Rothbard?
This is interesting. I would not be surprised if the same is true for humans.
There have been a lot of studies that indicate that Testosterone correlates with patterns of increased risk taking in humans; I would imagine that the same is true for monkeys.
"Testosterone and financial risk preferences": http://www.sciencedirect.com/science/article/pii/S1090513808000676
"Gender differences in financial risk aversion and career choices are affected by testosterone": http://www.pnas.org/content/106/36/15268.short
Shit, if this continues to happen, we'll all be outsourced by monkeys.
Here is another interesting study that suggests that Testosterone might be responsible for alpha.
"Endogenous steroids and financial risk taking on a London trading floor" http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2329689/
"Operating from a position of abundance allows one to put oneself in the path of greater opportunity, even though that comes with some risk. Likewise, operating from a place of scarcity tends to make one risk averse for some reason, even though it stands to reason that the opposite approach would be more appropriate."
That's a great point, and I find this fascinating as well. Haven't monkeys been used to pick stocks before? Let's take the dehydrated risk-takers and start a hedge fund. It might not beat the market but it doesn't have to.
Great post. We can learn so much from primates.
The simple explanation of poorer/thirsty monkeys taking less risk is to be conservative about resources that the lack of which will result in starvation. The ones with ample resources can afford to take a loss, they won't die of hunger/thirst. Add testosterone to either scenario and the resulting level of aggression exaggerates whatever course of action is being taken: risk takers will pour their energy into taking more risk and the more conservative will channel more energy into risk management and increased efficiency.
Welcome to the quantifiable aspect of social sciences, where it becomes actual hard science, and where all of Freud's bullshit gets unceremoniously tossed into the bin. Replace the dubious Jeung with the intellectual titan that was Jean Piaget. Everyone talks about how the quants raped Wall Street, and congrats on building a trading bot with fast reflexes, it reshaped the entire business. If you think the quants beat the system, though, wait until the behavioral psychologists begin to apply textbook principles to taking advantage of other people's strategy. Added bonus - I'm assuming that someone who can get through 400 level statistical behavioral analysis courses could learn basic valuation and order execution functions, as well as understand the larger context that a machine will never in our lifetimes grasp.
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