Business Daily from THE HINDU group of publications
Sunday, Nov 08, 2009
ePaper | Mobile/PDA Version | Audio | Blogs

Investment World
Features
Stocks
Cross Currency
Shipping
Archives
Google

Group Sites

Investment World - Economics
Columns - Simple Economics
Why thinking too hard is bad



Conscious thinking makes us commit mistakes.

B. Venkatesh

Consider this. You are taking an exam that contains multiple choice questions. You are unsure about certain answers. The more you think, the more you are confused. The more you are confused, the more likely you are to change your answers. And more answers you change, the more likely it is that your original answers were right! Why?

Neuroscientists attribute this experience to “cognitive unconscious”. This means that our brain does most of its activity (correctly) without our conscious effort or as an automatic process.

Automatic process

Take car driving. You may have, perhaps, consciously changed gears the first time you drove a car. But once the activity became a routine, the brain ran its automatic process. After couple of months of driving, for instance, you may be talking on your phone and automatically changing gears at the same time.

It is the same with exams. Your unconscious thinking retrieves all the data stored in the brain at high speed when you are reading the question, provided you prepared well for the exam. When you are deliberating the answer, you switch into conscious thinking or controlled process. And that engages another part of the brain (right frontal lobe) that is known for slow thinking. Often, conscious thinking makes us commit mistakes!

Drawing patterns

Neuroscientists have shown through various experiments that those who draw inferences or patterns unconsciously do better than those who take conscious effort to do so.

This is indeed true in the stock market. A technical analyst would tell you that the stocks that fetched her handsome returns were the ones on which she spent least time analysing. Why? Technical analysts train themselves to read price patterns. Their brains, hence, run the automatic processes to catch the routine (patterns). But when an analyst tries hard to discern a price pattern, the brain runs its controlled process.

Scientists claim that we decrease efficiency and accuracy by thinking too hard! Neuroscience, indeed, gives a “brainy” meaning to what we already knew — practice (routine) makes us better!

(The author is the founder of Navera Consulting. He can be reached at enhancek@gmail.com)

More Stories on : Economics | Simple Economics

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Stories in this Section
Can investment portfolios pay health-care costs?


Fisher’s scuttlebutt
Insurance first, investment later
Back on the traditional path
Update
Recovery tempered by challenges
Will new trading hours help investors?
Deciding on donations
What lies beneath the numbers
Reliance Equity Opportunities: Hold
Tata Balanced Fund: Hold
Some pointers on...
When to sell a fund

Chart Focus: Max India (Rs 179.90): Buy
M&M Finance: Buy
Zee Entertainment: Hold
Punj Lloyd: Sell
Larsen & Toubro: Buy
Clearing the premise for taxes on property
Pivotals: Reliance Industries (Rs 1,956.7)
Index Outlook: Sensex wavers around 16,000
Query Corner: Religare continues to be in down-trend
Pune shops for commercial space
Taking stock of southern market
Making room for the Games
Changing mood in realty
Why thinking too hard is bad
Baskets of X
Bull's Eye
Prominent bulk deals on NSE and BSE
Index Strategy: Bear put spread strategy
Stock Strategy: Sesa Goa, ICICI Bank could see sharp swings
Guiding charity
Biz Quiz
Money moves in waves




The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line