Friday, 20 November 2009

Lecture with Evan Davis- Bubbles

So, today we had a lecture, this time from Evan Davis, well known for being in Dragon's Den and a number of other BBC things...



Anyway, he came into our school to talk about economics, and actually made it understandable even by me! Basically he described the recent economic crisis in a way everyone could understand, and mainly about "bubbles", which form and burst.

How do these bubbles occur? What makes them occur? and introduced us to a popular side of economics called behaviorial economics, which is how people actually think and might react to a situation, instead of assuming that everyone takes one route...

"People buy more at the supermarket when they are hungry than when they are full."

Also he advised us of three mistakes or three principles which could fuel thesebubbles:

- Overconfidence
The idea we can beat the bubble, and take advantage of it e.g. buying when house prices are low and selling when it is high before it crashes.

- Herd Psychology
Everyone else is doing it, so we should join e.g. everyone else is buying houses, let's buy one too!

- Primative Thinking
Finding facts and selecting evidence to match what you think.

He was eloquent and covered many points in an interesting and uplifting way. One of the few lecture's we've had that's actually been enjoyable... :P

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