The Kathy Kristof article you cite shows that she got her information
from a contact at the Russel Investment Group.
Investors need a game plan, strategist says Kathy Kristof
Tucson, Arizona | Published: 07.18.2004
If investors would act a bit more like rats, they'd do much better in
the stock market, said Ernie Ankrim, chief investment strategist at
Russell Investment Group in Tacoma, Wash.
Searching for the source of the comparison made about the behavior of
rats and humans led to the original article on the Russell site as
well as a posting of the same article in a more recent newsletter. The
article includes a citation of the research report that is described
in the investment newsletter.
Succeeding as Investors In Spite of Ourselves
Russell Investment Group
Investor Newsletter ? 4th Quarter 2005
The research report cited by Russell is titled: The Left Hemisphere?s
Role in Hypothesis Formation. I was able to locate this document and
you can read it in its entirety. This journal article cites earlier
research on the maximizing and matching behaviors of animals. The most
relevant article is titled Matching, Maximizing, and Hill-climbing and
I?ve located a complete copy of this article for you as well.
The Journal of Neuroscience, 2000, 20:RC64:1-4
The Left Hemisphere's Role in Hypothesis Formation
In a probability guessing experiment, subjects try to guess which of
two events will occur next. Humans tend to match the frequency of
previous occurrences in their guesses. Animals other than humans tend
to maximize or always choose the option that has occurred the most
frequently in the past. Investigators have argued that frequency
matching results from the attempt of humans to find patterns in
sequences of events even when told the sequences are random. There is
independent evidence that the left hemisphere of humans houses a
cognitive mechanism that tries to make sense of past occurrences. We
performed a probability guessing experiment with two split-brain
patients and found that they approximated frequency matching in their
left hemispheres and approached maximizing in their right hemispheres.
We obtained a conceptual replication of that finding on patients with
unilateral damage to either the left or right hemisphere. We conclude
that the neural processes responsible for searching for patterns in
events are housed in the left hemisphere.
In a variety of such guessing experiments, humans typically exhibit
frequency matching. That is if the lights to the two sides are
presented with probabilities p and (1 p), the subjects guess the two
lights with probabilities p and (1 p) (Humphreys, 1939 ; Estes, 1961
). The tendency to match frequency has intrigued investigators because
it is a nonoptimal strategy for this paradigm. Maximizing, or choosing
the most frequent option all of the time, yields more correct guesses
than matching as long as p 0.5. In other words, if the red light
occurs with a frequency of 70% and a green light occurs with a
frequency of 30%, overall accuracy will be highest if the subject
predicts red all of the time (maximizing). Frequency matching will
lead to correct answers 58% of the time (0.7 * 0.7 + 0.3 * 0.3).
Maximizing will lead to correct answers 70% of the time (0.7 * 1.0 +
0.3 * 0.0). Interestingly, most other animals maximize in such
paradigms (Hinson and Staddon, 1983 ). So why do humans choose a less
optimal strategy than rats? Our view is that humans believe there is a
pattern, even if told the sequence is random, and they attempt to
figure out the pattern. Any reasonable pattern hypothesized by the
subjects would have to match frequency if it were to be a correct
hypothesis. Perhaps animals other than humans adopt a more optimal
strategy than humans in this paradigm, because they are not as
hindered by the tendency to search for and posit causal hypotheses.
J Exp Anal Behav. 1983 November; 40(3): 321?331.
Matching, maximizing, and hill-climbing
John M. Hinson and J. E. R. Staddon
In simple situations, animals consistently choose the better of two
alternatives. On concurrent variable-interval variable-interval and
variable-interval variable-ratio schedules, they approximately match
aggregate choice and reinforcement ratios. The matching law attempts
to explain the latter result but does not address the former.
Hill-climbing rules such as momentary maximizing can account for both.
We show that momentary maximizing constrains molar choice to
approximate matching; that molar choice covaries with pigeons'
momentary-maximizing estimate; and that the ?generalized matching law?
follows from almost any hill-climbing rule.
Full text is available as a scanned copy of the original print
version. Get a printable copy (PDF file) of the complete article
(1.5M), or see the PubMed citation or the full text of some References
or click on a page below to browse page by page.
You can continue your explorations of the matching and maximizing
behaviors of humans, rats and other animals by following the links
that led me to the results for this question.
Best wishes for your projects.
~ czh ~
research rats humans choosing red green lights
maximizing matching rats