Seduction and Betrayal; Eliminating Risk in Investment Part One
This series of papers considers a fairly simple approach to improving decision making when making investments. These include many types of investment — including but not limited to time, energy, emotion, trust and other resources- including money- in people, businesses, communities, ideas, problems and opportunities.
Applying for a job, advertising a job, starting a business, investing in a start-up, embarking on a relationship, reading a book, writing a book listening to a new band, writing a new song, trying a new beer, brewing a new beer, all need investment
But we often ‘lose’ on these investments. How can we make ’better’ investment decisions at whatever scale?
Decision making is a core human task. We all make decisions every day.
But how do we differentiate one type of decision from another? How do decisions interact with the ‘environment’? And what is it? How does the environment actually respond to these decisions? How do these decisions replicate? How does the environment affect these decisions?
We often differentiate decisions on the basis of a simple risk-reward equation. Our understanding of the consequences of our decisions is often limited, even when using scenario planning and systems thinking.
The second, third and fourth level effects of our decisions are just too complex. As in games such as chess or Go, you can only think so many moves ahead, and track so many moves behind. We lack information on the likely behaviour of other ‘player’. And our information regarding stochastic multi-player games is even worse.
We do ‘know’ that information seems to be a key element in making better decisions, but how can we operationalise this?
When we interact with our physical, social and personal environments, bits of information are encoded into our physical and data structures (primarily the brain, also other structures- think about muscle memory) as a series of neural connections. As interaction continues, the new information modifies existing information and creates new ‘memory’ which is, in itself, subject to plasticity and change- much of which we do not recognise.
But is this one way process a useful way of thinking about what is, after all, an interaction?
Whilst primitive memory formed by trial and error dies with the organism. the evolution of complex neural structures allowed information to skip from one brain to another, first by imitation as a shortcut to trial and error, and later, with language, as information. Academics such as Chemero even suggest that (radical embodied) cognition can ‘take place’ outside the brain.
And this portability suggests what Richard Dawkins calls memes, bits of replicating information Memes, like genes, seem to undergo a type of Darwinian evolution in a complex relationship with their physical, social, and personal environments. In our time, it is the meme × environment interaction that is fundamental in understanding how we can improve our investment decisions.
