Wednesday, May 6, 2009

Bankers and animal spirits

"Incompetence is certainty in the absence of expertise. Overconfidence is certainty in the presence of expertise".

Malcom Gladwell in his analysis of the role of bankers in causing the financial crisis. He feels that bankers were "mis-calibrated" in the "overestimation of their ability to make predictions and control the somewhat random environments surrounding them". The "confidence" trait is one of the five dimensions of animal spirits, outlined by George Akerlof and Robert Shiller, in their recent book by the same name.

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