From a recent Discover blog article
I have never seen any research (behavioral or otherwise) that has studied the affects of time perception on investment pricing directly. Provided that investments are priced by an expected cash flow, growth, and discount rate over some estimated amount of time, it seems to me that pricing distortions can arise from changes in time perception. For instance, how does changing time estimation alter our pricing schemes when preparing or researching a trade or investment? Think also about times when you were stressed, time perception seems to speed up in these instances doesn't it. Does this stress induced time traveling alter pricing mechanisms for traders? I really do not know the answer to these questions, but it is thought provoking.
A baseball speeds from the hands of a pitcher, a slave to Newton’s
laws. But in the brain of the batter who is watching it, something odd
happens. Time seems to dawdle. The ball moves in slow motion, and
becomes clearer. Players of baseball, tennis and other ball sports have
described this dilation of time. But why does it happen? Does the brain
merely remember time passing more slowly after the fact? Or do experienced players develop Matrix-style abilities, where time genuinely seems to move more slowly?
According to five experiments from Nobuhiro Hagura
at University College London, it’s the latter. When we prepare to make a
movement – say, the swing of a bat – our ability to process visual
information speeds up. The result: the world seems to move slower.
I have never seen any research (behavioral or otherwise) that has studied the affects of time perception on investment pricing directly. Provided that investments are priced by an expected cash flow, growth, and discount rate over some estimated amount of time, it seems to me that pricing distortions can arise from changes in time perception. For instance, how does changing time estimation alter our pricing schemes when preparing or researching a trade or investment? Think also about times when you were stressed, time perception seems to speed up in these instances doesn't it. Does this stress induced time traveling alter pricing mechanisms for traders? I really do not know the answer to these questions, but it is thought provoking.
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