My column today argues in favour of thinking ssslllooowwwwllllyyy through crises as a counter-weight to the mass of real-time information we are inundated with these days (it builds on a rough blog I posted over the weekend, which I have now removed). You can read it here. And an excerpt (I have not yet read DK's latest book, as an aside):
"I think one reason financial markets tend to "overshoot" so often is because capital at the margin can overweight the observed challenges relative to the expected solutions. This is probably tied to our so-called "asymmetric value functions", for which psychologist Daniel Kahneman was awarded the Nobel Prize in Economics. His work showed us that when making decisions, people seem to weight expected losses more than gains. One might extend this framework to perceived problems (losses) and their remedies (gains)."
