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Capital Allocators – Inside the Institutional Investment Industry

Jun 4, 2018

Tali Sharot is a leading expert on human decision-making, optimism and emotion. A neuroscientist by trade, Tali combines research in psychology, behavioral economics and neuroscience to reveal the forces that shape our decisions, beliefs and inaccurate expectations of the future. She is currently a visiting professor at MIT, and is also an associate professor of Cognitive Neuroscience at University College London where she directs the Affective Brain Lab. Tali is the author of The Influential Mind, The Science of Optimism, and The Optimism Bias. 

Our conversation tackles many of the issues Tali has studied in her career, including the optimism bias, sense of control, confirmation bias, behavioral change, and overconfidence.  We then touch on some of the applications of her work to investing, including the home country bias, making non-economic financial decisions, active management, emotion-driven decisions, team-based decisions, and research heuristics.  Lastly, we learn a few parenting tricks from the Influential Mind.

This conversation took place behind closed doors at the Context Leadership Summit in Las Vegas. 

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Show Notes

3:18  – Tali’s educational path to becoming a cognitive neuroscientist

4:58 – Why people make mistakes, optimism bias

7:24 – Does optimism bias impact our view of others as strongly as ourselves

9:12 – What should we do about our optimism bias

12:37 – How does controlling your environment impact how your brain works

14:47 – How do we work around our problems in decision making?

17:40 – How do you get more people to conform to things that are beneficial

21:11 – The impact of different personality types on these tactics

22:05 – How do we use this information to impact financial decisions

23:53 -  Home country bias among investors

25:00 – Is home country familiarity a bad thing?

27:12 – Impact of well-being on investment decisions

28:20 – Picking stocks because of the illusion of control

29:52 – The role of emotion in driving our decisions

32:39 – How do you use this information to help individuals or teams make better decisions

36:23 – New research

40:41 – Raising kids

42:29 – Closing questions