Error management theory examines how we make decisions in situations where uncertainty is high. The theory states that the costs of the decisions we make affect our behavior, and if the costs of two behaviors differ, the organism should choose the one with the lower cost based on evolutionary processes.
According to error management theory, four conditions can be mentioned in uncertainty. These concepts are frequently used in evolutionary psychology. Aslan Let’s illustrate this with an example:
A man is walking in the forest and sees the bushes moving. Keep this in mind at this time Aslan It depends on whether it is or not. If we analyze this situation, we can talk about four conditions:
- Positive Correct: Really in the bush Aslan There is another person Aslan Think it is. In this situation, he can change his path and survive. While the cost will be the length of his journey, the reward he will receive will be his life.
- Negative Correct: In the bush Aslan There is no other person. Aslan He thinks not. In this case, it continues on its way. Man has no value and the path is not spread.
- positive error: In the bush Aslan There is no one but a person Aslan Think it is. In this case, it extends or changes its path. Cost is the length of the road, but in the bush Aslan He believes he saved his life because he thinks so.
- Negative Error: In the bush Aslan There is but the person Aslan He thinks not. In this case, he continues on his path and pays for the wrong decision with his life. If he had stopped his way, nothing would have happened.
As can be seen from the examples, the values of saying something does not exist when it does exist are not the same as saying that it does when it does not exist. Aslan When you say you’re there when you’re not, you can be a little more weary of extending your distance, but Aslan If you say no when you are there, you will lose your life even though your journey will not be long.
What if the coin suggested by the trend goes up?
If we adapt the relevant example to the cryptocurrency industry and why our cognitive sensitivity is affected, when a friend or crypto influencer tells you about an opportunity, the costs of taking advantage of the opportunity or not are the same. There are not. If you invest (positive error) even though their recommended coin will not go up, you may lose some money (if you set your risk correctly, if you put all your money on the same statement move based on , you’re already gambling) but if their recommended coin goes up and you haven’t invested (negative error) you think it’s too high. Because you will not only lose the opportunity that has already been told to you, but you will also lose the possibility of making money. Because of this, you may fall into FOMO (fear of missing out) and enter high levels, start following unnecessary advice given by other people, and make risky decisions. .
“Evolution selected for the stupid, not the smart.”
In summary, we can be influenced by many things in the decision making process. Even stimuli that we think we won’t be affected by affect our cognitive sensitivities, causing us to say, “I wonder” or “What if?” Like confusing ideas. Egen, our evolutionary psychology teacher at Assoc. Doctor There is a saying mentioned by Ibrahim Merit Ozil, but I don’t remember whose name it was: “Evolution has chosen the stupid, not the smart.” So getting it wrong isn’t as bad as it sounds. In the bush Aslan when you are away Aslan Although our ancestors, who thought it was a positive mistake (positive error), got their way, they showed more evolutionarily adaptive behavior, because other behavior would have cost them their lives.
Is that why we believe in the discourse of phenomena?
Considering that every investment you make involves some degree of risk (we can never be completely sure about the direction of the stock market. For example, black swan events), if We want to take some risk, so it seems more logical to lose some money than to make a lot of money. That’s why we allow influencers/friends/social media, i.e. everything outside, to influence us, or we are unintentionally influenced by them.
Risk management and research are essential.
What matters at this point is how you manage risk. If you believe that the relevant coin will rise and collect all your money at once, this bush. Aslan It’s like believing you are there and never getting to where you need to be, staying where you are, or even going backwards. At the end of the day, while other people are making money with the right investments and portfolio management, you’ll be stuck and sad about the profits you didn’t get. You need to adjust your risk properly (enter with little money and put a stop loss instead of entering with all the money), do your research (is the coin they are talking about Does it really have this potential?Toconomics analysis can be done) and then decide which path to take. Let that be the subject of another article…
This article does not contain investment advice or recommendations. Every investment and trading venture involves risk, and readers should do their own research when making decisions.
