Money Psychology 11: Reasonable > Rational
You're a screwed up, emotional person; not a spreadsheet. So, instead of making coldly rational financial decisions, aim to be reasonable.
For example, fevers play a role in the body’s road to recovery. A one-degree increase in body temperature has been shown to slow the replication rate of some viruses by a factor of 200. Fevers turn on the body’s immune system. They help the body fight infection.
Now, it may sound rational to want a fever if you have an infection. But it’s not reasonable.
Similarly, a rational investor makes decisions based on numeric facts. A reasonable investor also considers the social component to minimise future regrets.
Such decisions are made in a conference room (surrounded by co-workers you want to think highly of you), with your spouse (you don’t want to let down), or judged against the silly but realistic competitors that are your brother-in-law, your neighbor, and your own personal doubts.
Aiming to be mostly reasonable works better than trying to be coldly rational.
[The Psychology of Money: Lessons 11 of 18]
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