“Behavioral Finance” is all the rage.
BeFi (as the not-so-cool kids in the financial world call it) is the next phase in guiding individuals, teams, boards, companies, and leaders to better decision-making.
There is plenty of material telling us where people get it wrong. Even the best brains get deceived by a litany of behavioral biases. These biases cause people to fall off the track of economic rationality. However, even with all of these labels, there is little guidance on how to identify and use this context.
Until now . . .
It can diagnose an individual’s emotion and confidence, its directionality and its relationship to group and social mood.
Further, Peter asserts that people (and their advisors) can use this information to pull decision-makers out of the own limitations of their own silos.
People will be able to recognize what is occurring in their surroundings, mitigate risk and maximize opportunity.
We’ll discuss Peter’s findings, the mental model he’s developed and, finally, the process of writing the book.
The Confidence Map- central tenet of the book
The context of one’s place on the confidence map has as much to do with the decision making process as data and logic.
Rationale behind the book – what was the problem that you were seeing?
What was your research showing?
Johnson and Johnson Tylenol Case
Boeing 737 Dreamliner
Defining the axis-
Toggling between “Certainty and Control”
Toggling between “Confidence and vulnerability” (not price! Are humans innumerate?)
Mapping human confidence (and using it in a forward looking manner)
Individuals and recognizing their own position in the chart
Leaders looking at group confidence and mood “at scale” to mark strategic shifts
Collective mood vs individual mood
Defining the group (which group is the individual following)
Recognizing where one is on the map personally vs the group vs the masses
Augmenting “behavioral finance”
Behavioral economics tries to give us the tools and bias catalogues of where human beings fall off the train of rationality
How do we think about the confidence map to help people predict (and avoid) their own frailties – especially around big decisions?
What is the “equipment” you need to use these tools effectively to help me to understand their decision contexts and make better decisions (potentially in times of maximum stress)?
Is there a danger that this is giving a loaded gun to the financial services industrial complex?
What was the book writing process like?
Turning a box of ornaments into a Christmas Tree
Using a Coach
What were the struggles?