Invest Like the Best: Dan Egan

Link: http://investorfieldguide.com/egan/

About Dan: Managing Director of Behavioral Finance and Investing at Betterment


Uses insights from behavioral economics to nudge more adaptive behavior

Design a better dashboard

  • speed bumps on mobile platform to discourage impulsive trading
  • ‘tax impact preview’; the magnitude seems to be less influential than the outright presence of this speedbump; interesting side note is that this has a larger effect in Census areas known to be Republican
  • When messaging entire user base, they would sometimes prompt action (ie selling stock) in users who would have done nothing; they learned to send messages to people who were about to commit an action. This improved efficiency of the message by eliminating ‘false positives’
  • Displaying information which aligns focus with objectives instead of just defaulting to emotionally charged performance metrics or even the red/green triggers we are used to seeing
  • Recent related WSJ article pointing out the tyranny of what is displayed to you: https://www.wsj.com/articles/the-high-financial-price-of-our-short-attention-spans-1540174321

Designing a system informed by your beliefs when you are rational to pre-empt decisions you might make when emotional

  • Cranky judges: parole sentences are heavily influenced by time since their last meal. For such important decisions, we need a better system. Doctors’ diagnosis subject to the same effect!
  • Building custom tailored indices¬†aligned with people’s stated goals

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