Now, culture, I talked about earlier, and social contagion. But there's so much to say about this, but culture is our society's values and norms. Social cognition is our thinking in generally, and Émile Durkheim in 1897 was a pioneer in sociology. So, we have a collect, well, actually the word collective memory was used by Durkheim. We remember the same thing, we talk, we all have the same facts and statistics in our minds, so we reach similar decisions. There's social contagion, and there's a tendency for us to adopt beliefs of other people. There's a mathematical theory of disease epidemics that can be applied to speculative behavior. So, I've assigned for this lecture of the course some pages from the book Irrational Exuberance that I wrote. We talked about moral anchors for the market in the form of stories. There's a whole branch of psychology called narrative psychology which reminds people that the human mind is influenced fundamentally by stories about people. That we derive motivation from these stories. Robert Abelson at Yale was involved with that too. We have identity, a sense of identity, an ego involvement with stories that we think relate to our life. We have a story of our life, and this story can be tied in with other events that help promote one's sense of ego. And finally, my last of my categories is antisocial personality disorder. This is a disorder which has been recognized by psychiatrists, it has been called sociopath, or sociopathy, or sociopaths, or psychopaths. And so the American Psychological Association publishes a diagnostic and statistical manual. From their fifth edition, we define this disorder in the following terms. Identity, egocentric, self-esteem from personal gain, self-direction, absence of prosocial internal standards, lack of empathy, incapacity for intimacy, manipulative, deceitful, callous, hostile, irresponsible, impulsive, risk-taking. Boy, those are a lot of insults. But what they're referring to in the DSM5 is that this is a pattern, that there are people who show all of this things. There's something in their brain that is different, and so certain emotions which we take for granted are not there. Now, in DSM5 as opposed to DSM4, it used to be all or nothing [COUGH] diagnoses, now they want to acknowledge gradations, or levels of. It's not all or nothing, we might all be antisocial at some time, but not at others. There's also, this is different from borderline personality disorder, which is more common among women than men. And about 3% of men are antisocial personality disorder, at least according to the fourth edition, and only 1% of women. But women, it's reversed with borderline personality disorder. So, instability of relationships, extremes of overidealization, and then devaluations. They swing from thinking this is a perfect friend to not perfect. Depressed moods lasting hours to days, inappropriate intense anger, frantic efforts to avoid real or imagined abandonment. But I want to talk about antisocial personality disorder. The movie The Big Short suggests that some people in the finance [LAUGH] profession have antisocial personality disorder, is that true? Well, there's a literature on this, I think the answer is no, those guys are in jail. That the profession like, the finance profession, like other professions is pretty successful in discovering these disorders, but on the other hand, there might be an attraction. If you read the list of symptoms of antisocial personality disorder, it does fit, but I think that it's not true. That, like in any other profession, we are successful, and you can't hide these things for too long, and you'll end up caught. It's unfortunate we have to deal with these, it's 3% of our male population has this disorder, we have to live with it. Anyway, I'm just going to conclude with these psychological principles that I talked about are involved in many things that happen in the financial world.
