The Stock Market of the Brain

Having just finished Michael Shermer's Mind of the Market from this year combined with having heard about prediction markets and having read various things on behavioral and neuropsychology, amongst them William James, I find that there's a remarkable correlation between the metaphor of the stock market and the physiological methodology to our storing of information as well as our intuitive selection of truths.


Complex Adaptive Mechanisms

In his book "Principles of Psychology", William James talk of our entire existence as an intricate system of habits, ever evolving and ever fluctuating, and he refers to one of the most important trait of our brains as plasticity. This plasticity is what makes it possible for our brains to record our impulses, which manifests itself in the networks of neurons and synapses, that gets gradually reinforced or abandoned. In other words, whenever we do something (literally anything), the neurons that fire get reinforced, and the synaptic network grow stronger, which is a trait, which serves to habituate skill and behavior.

I was fortunate enough to become aware of the Reboot event for digitech visionaries and cyberculture-enthusiasts earlier this year, and I made myself watch the entire collection of videos of speakers from the Reboot9 even from 2007. One of the many things I found incredibly interesting was the speech on Prediction Markets by Nosco's Jesper Krogstrup, where he was presenting a marketing estimation strategy used for creating better conditions for flow of information and merit-based stock market like estimations. The employees of the firm applying this kind of estimation strategy would be given a sort of currency either worthy of further attention or actual money or whatever would represent some sort of an incentive to participate. Proposals like "will the production of a certain product be able to meet deadline" would have stocks like "yes", "no" and probably "yes, but.." etc., which the employees could buy. The employees would have the option to keep trading back and forth depending on their estimates and expertise within a particular field relevant to the production, and this 'market'-simulation would provide an interesting tool of estimation, as well a means to track obstacles during the production-process.

This sort of prediction market serves as a pretty interesting image almost analog to the main motivating factors in establishing neuronal networks, in the sense that a dynamic and organic process of trial & error, constant interpretation of inputs and reevaluations provide creates, reinforces and depletes the links, which in turn becomes a process of making us beings more efficient in the immediate environment. Shermer applies the idea of the 'complex adaptive system' to such conditions, underlining the importance of economics in understanding humans.


Bulls, Bears & the Stock of Emotion

The appropriate response to complex economic theory on why people function the way they do, is to bring emotions into the equation, and watch just how unscrupulous we appear to be. However, while emotions do in fact serve us and our purposes, on the contrary of what folk-psychology would have you believe ('don't get emotional', 'he has quite a temper', 'I let emotions get the best of me'), it is true that our emotions can spiral off into patterns of behavior, which doesn't help to serve our purposes. For example, we tend to look, at optimism as a positive trait, or depression as a negative trait, based mainly on the social inhibitions that such emotions demotivates or motivates. However, while the feeling of happiness serves to reinforce attachment to people, things or situations, sadness serves to expel unwanted elements from our life. Intuition or gut instinct is therefore a sense of what is particularly right for me, in that it serves to motivate habituation or change.

In lieu of this sort of reasoning, one can't help but question the idea of 'free will', when we are driven by emotions and a recursion of other underlying emotional mechanisms strongly motivating our behavior, and in extension our thoughts behaviors as well. Is 'consciousness' in reality a stream of fluctuating emotive alignments, which allows us to 'feel', where as the surrounding processes in our brains actually operate these pieces of 'machinery' which we call ourselves? The research on the delay from in our perception, our processing of inputs and our reaction certainly indicates that we are somewhat removed from the now, and it doesn't help that there seems to be even further removal from the processes of actions to the process of thinking. It certainly rejuvenates the sense of solipsism even if just a bit.

On thing is certain, though. The system of the neuronal network provides an explanation for the mechanics of what is known as instincts, though how much of our so-called instincts hail from our ancestors is yet to be fully determined.


In conclusion

The metaphor of the stock market seems to prevail, as our behavior are representations of stock transactions that go on to empower or cast away systems of instinctive behavioral patterns, which doesn't serve our purposes, and as we are in fact social beings, two people increasing their family constitute a market trend. In a small scale, this means various things like physiological traits for certain, and perhaps a variety of subtle mental attributes as well. On a larger scale though, it applies very well to evolutionary theory, as it explains adaption and development of behavior. There are, just like financial markets, certain restrictions put on us, as well as administration of social patterns. These too function as adequate tools for understanding, that there are exterior motivating factors, which further complicates the interpretation of human development and behavior.


Sources:

James, William (1957). "Habit". Principles of Psychology vol. 1. Dover.
Shermer, Michael (2008). Mind of the Market: Compassionate Apes, Competitive Humans and other tales from Evolutionary Economics. Times Bookes.
Beyond Belief Symposion I (2006)
Reboot9 (2007) http://www.reboot.dk