Risk averse investors process the risk of monetary loss with the same circuit they contemplate disgusting things. While risk seeking investors process their potential winnings with the same reward circuits they use by drugs like cocaine.
An imbalance in an individual’s dopamine system can easily lead to greater risk taking.
Even an average individual and every day investors gets a neurochemical hit, similar to a cocaine rush from just a small financial gain.
Great book. I think this is the best book to understand crypto markets - it is all very gut driven.
When you get further in the book you will understand why people double down on a deep but sell too early… is wired in peoples behaviors. Following the rational path is going against gut and on price swings emotions get really close to the skin. An oh-boy do crypto have price swings, sophisticated investors feast on retail emotional reactions.
