A team of scientists in Japan have developed technology to turn monkeys into scalpers.
OK, not really, the technology turns the monkeys from high risk takers to low risk takers.
- scientists implanted chips into their brains
- used flashes of light from implanted chips to activate two different sections of the macaque monkeys' brains
- Switching one on encouraged them to take bigger risks with the hope of a bigger payoff, while switching the other section on led the animals to settle for a smaller but more certain reward
However, there's a huge problem here. The scientists don't understand Expected Value. The monkeys do. This is basic trading.
Check this out:
- the macaques were trained to look at different colored spots on a screen to receive a water reward
- some spots would give the monkey a small reward 90 percent of the time
- others gave a reward that was 10 times larger, but it only paid out 10 percent of the time
- Overwhelmingly, the monkeys went for the high-risk, high-reward spots.
Well, yeah. Do the maths.
Let's call the reward "R":
- getting 1R 90% of the time is R*0.9 = 0.9R
- getting 10R 10% of the time is 10R*0.1 = 1R
You with me?
(R*0.9) is less than (10R*0.1).
The monkeys were right all along.
No wonder they get all the $ and all the chicks.
