There's no question that many members of our species make terrible and irrational economic choices -- from risky real-estate bets to market panics to outright fraud.
But are these lousy decisions the product of lack of proper oversight and regulation -- as frequently gets discussed now -- or something baked into our very cognitive processes as a species?
Laurie Santos, who runs the Comparative Cognition Laboratory (CapLab) at Yale, set out to prove just that, establishing an "economy" of sorts among a group of primates, and observing the interactions as they deal with the exchange of food for "money." What she found was astonishing, as she related in a recent presentation at the TED conference.
The monkeys in Santos' experiment were given metal tokens that would function as money, and were taught that the tokens could be exchanged for food. Human "salespeople" -- student lab workers -- would sell monkeys the food at different prices, so the monkeys quickly learned who delivered the best value and quality. The monkeys even responded when people had "sales" going on.
Santos reports there was never any evidence of the monkeys "saving" their currency -- much the way humans don't. There were even episodes of spontaneous "larceny," in which monkeys would steal tokens from each other. Again, familiar territory for the human race. The monkeys were also presented risky propositions -- in which they could opt for a consistent amount of food for their token, or take a chance with a salesperson offering varying amounts, which could be greater at times. The monkeys took irrational risks with their tokens.
The lesson for humans, Santos concludes, is that we will keep making the same mistakes over and over again -- and we can't help it:
"We'd like to think that the mistakes we make are really just the result of a couple bad apples or a couple really sort of FAIL Blog-worthy decisions. But it turns out... most of us, when put in certain contexts, will actually make very specific mistakes. The errors we make are actually predictable. We make them again and again.... think of our evolutionary predilection for eating sweet things, fatty things like cheesecake. You can't just shut that off. You can't just look at the dessert cart as say, 'No, no, no. That looks disgusting to me.'"
Santos holds out hope that we employ new systems or processes that help overcome these constantly repeated errors:
"Humans are not only smart; we're really inspirationally smart to the rest of the animals in the biological kingdom.... We actually have all of these cases where we overcome our biological limitations through technology and other means, seemingly pretty easily. But we have to recognize that we have those limitations. ...the irony is that it might only be in recognizing our limitations that we can really actually overcome them. The hope is that you all will think about your limitations, not necessarily as unovercomable, but to recognize them, accept them and then use the world of design to actually figure them out."
This post was originally published on Smartplanet.com