Behavioral FinanceFinancial analysts have been aware for quite a long time that excess market volatility is a phenomenon which cannot be rationalized by the principles of fundamental analysis and statistical technical analysis alone. The task to identify what drives stock prices and what drives investors’ decision making is incomplete without the addition of the emerging field of behavioral finance. Behavioral finance is stuck with identifying the forces of market psychology and its effects on the overall sentiment steering market trends and pricing. It deals with psychological factors which influence the nature of human beings, a departure from rational performing factors such as: economic activity, consumption, investment, and interest rates. Human investors are greatly influenced by cognitive and emotional biases, and are subject to the sway of herd instinct. At the core of behavior finance is the development of rigorous models to provide insight into market sentiments for better measurement of future pricing.

A 1922 paper titled Overreaction and Diagnostic Expectations in Macroeconomics, by Pedro Bordalo, Nicola Gennaioli, and Andrei Shleifer, is highly cited at the American Economic Association this year. The authors used the Survey of Professional Forecasters and Blue Chip survey data for future four-quarter forecasts with a large set of macroeconomic variables in their research. Their conclusion contrary to rational expectations: individual forecasters overreact most of the time. They started their research after the collapse of Lehman Brothers in September 2008 and the ensuing meltdown of the US financial system. Nicola Gennaioli, and Andrei Shleifer authored a book published by Princeton University Press about it in 2018:  “A Crisis of Beliefs: Investor Psychology and Financial Fragility.” The book presents a new theory of belief formation that explains why the financial crisis came as such a shock to so many people―and how financial and economic instability persist.

The authors’ most recent work focused on building upon the new framework for understanding today’s unpredictable financial waters. Their paper Overreaction and Diagnostic Expectations in Macroeconomics, describes the addition of one psychologically well-founded parameter to the rational expectations model to account for overreaction. Future research focuses on refining this model to include a second parameter to account for underreaction.

The importance of such work is groundbreaking. Adding human sentiment to measurements in dynamic Macroeconomic expectations using basic psychological principles, and empirical analysis, will lead to more accurate predictions. This comes at a time when GPU-accelerated data science, is substantially reducing infrastructure costs with superior performance for end-to-end data macroeconomic workflow projects.

On October 9th, the Nobel Prize in Economics, for 2023, will be awarded. There is a very good chance that Andrei Shleifer, Nicola Gennaioli, and Pedro Bordalo will be this year’s Nobel laureates. Historical data shows that demand for the works of the Nobel laureates increases in the weeks immediately following the Swedish Academy’s announcement. Readers are generally interested in the books of a recent Nobel Prize laureate, fueling demand for all types of works published by them. The increase in demand to a relatively static supply, often leads to higher prices at least until more copies are made available when feasible.

Last year, Andre Chevalier accurately predicted that the Nobel Prize in Literature was to be awarded to the French author Annie Ernaux. Her most recent book in English at the time, “Getting Lost”, bearing her signature, was selling around $500, which was a tenfold increase in price prior to the announcement. Andrei Shleifer and Nicola Gennaioli have no recent publications besides various papers published in journals, such as, the Journal of Political Economy and the Journal of Economic Perspectives. Even though the original book A Crisis of Beliefs: Investor Psychology and Financial Fragility does not include the recent research on overreaction measurement, it does present the foundational research that leads to that. There are multiple copies available at bottom level prices, but, that could change on October 9.


Advancement in Artificial Intelligence (AI) is progressing with unexpected speed, spreading across nearly every industry and discipline. The stakes in the race for generative AI are rising and technology companies are spending big. With the proliferation of big data and large-scale data lakes, we have now entered the world of large language models of chatbots such as ChatGPT, Copilot, and Bard. Early imaginings of AI by fiction writers conceived versions of intelligent machines taking over the world. And now the old debate of whether a machine can be built with an adequate model of the human mind is once again in the forefront.

AI will, without a doubt, help deliver exceptional new discoveries by outsourcing functions of our humanity to intelligent machines. But can scientific inquiry ever exhaust the infinite variety of the human mind? Mathematical logicians have argued back and forth on Kurt Gödel’s Theorem published in his epoch-making paper of 1931. Gödel exhibited, for the first time, that systems of logic, no matter how powerful, could never deduct proofs of all true assertions of arithmetic. The Gödelian formula may be the Achilles’ heel of AI, and therefore we cannot hope ever to produce a machine that will be able to do all that a mind can do.

Philosopher John Randolph Lucas, in his paper “Minds, Machines and Gödel,” 1 argued in favor of Gödel’s incompleteness theorem and against Alan Turing, Carl Hempel, Hartley Rogers and others, and concluded that “we can never, not even in principle, have a mechanical model of the mind.” Standing on the shoulders of a giant, he suggested long before machine learning was adopted in AI, that having rules (defined through human intervention or not) generate new axioms, in some cases may lead to inconsistencies and contradictions.

Douglas Hofstadter, Professor of Cognitive Science and Comparative Literature at Indiana University in Bloomington, wrote the book: “Gödel, Escher, Bach: an Eternal Golden Braid.”2 He described his book as “a metaphorical fugue on minds and machines.” He uses the self-referential structure lying at the heart of Gödel’s incompleteness theorem to demonstrate the analogy between Gödel’s theorem, the patterns of Escher’s paradoxical drawings and the contrapuntal music of Bach. According to Hofstadter, words and thoughts produced by the human mind do not follow formal rules.

More recently, Max Tegmark, physicist, cosmologist, machine learning researcher, and professor at the Massachusetts Institute of Technology, wrote “Life 3.0: Being Human in the Age of Artificial Intelligence.”3 The book projects some plausible outcomes, beyond the current developments at labs such as Deepmind, OpenAI, and research in self-driving cars, to a time when AI exceeds human intelligence by not only being able to learn, but also redesign its own hardware and internal structure. Superintelligence is quite controversial right now and fiercely opposed by many computer scientists.

Disturbing visions of the future of AI are better left to science fiction novels with ideas about machine consciousness and self-replicating machines. Science fiction authors have been first to write about the consequences of AI. Samuel Butler’s 1872 novel Erewhon, contains ideas of machine consciousness. Self-replicating machines revolt in Karel Čapek’s 1920 science fiction novel, R.U.R., which coined the word “robot.” The science fiction novelist Frank Herbert, in his Dune series, betrays a world in which mankind is forced to fight against machines of AI, and impose a death penalty for those recreating them. While we are not quite there, the thought that we may one day have to confront such a world is terrifying. Now more than ever we need to be reminded of the fact that we have a limited time on this planet to seek knowledge, truth, and creations of beauty.


1 J.R. Lucas: “Minds Machines and Gödel”; PHILOSOPHY,  April and July 1961, pp.112-127

2 Douglas Hofstadter, “Gödel, Escher, Bach: an Eternal Golden Braid”  (New York: 1979,  Basic Book Publishers)

3 Max Tegmark, “Life 3.0: Being Human in the Age of Artificial Intelligence.” (New York: 2017, Alfred A. Knopf)


Tesla’s Controversial Articles, a Meme Phenomena

July 6, 2023
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  In one study, scientists at McGill University in Canada used eye-tracking technology to study which news articles volunteers paid most attention to. They found that people often chose stories about negative criticism in preference to positive or neutral stories. They concluded that people in general are more interested in inappropriate, offensive, or controversial news, […]

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The Fictional Mystery Dartmouth College Wished Away

March 5, 2023
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In June 1920, a few minutes after a dispute at a Dartmouth College dorm room, Bob Meads, a sophomore, who sold bootlegged whiskey he sourced from Canada, fatally shot senior, Hank Maroney of the Theta Delta Fraternity. Another Dartmouth College sophomore at the time, Clifford “Kip” Orr, deeply affected by the murder of his classmate, […]

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Cyberpunks among us

January 28, 2023
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We have entered the cyberpunk age. Many of the things that were predicted in cyberpunk literature are here now. The global cyber threat continues to evolve at a rapid pace, with a rising number of data breaches each year. Viruses, trojans, spyware, ransomware, adware, botnets, SQL injections, phishing cyberattacks developed by malicious programmers, threaten individuals, […]

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Helen Frankenthaler’s Valentine Art

January 11, 2023
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Helen Frankenthaler, a dominant figure in the abstract art world watered my plants when I went away for the weekend.  She lived diagonally across the street from me on a point of land surrounded on three sides by Long Island Sound.  We were neighbors sharing the same street address.  I don’t remember how we started […]

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Rare Book Sale Monitor update – End of 2022 Edition

December 11, 2022

Back to Boston for the first time since the pandemic, the in-person format had an impact on the performance of the 3rd ABAA Virtual Book Fair: Boston. This year the Antiquarian Booksellers’ Association of America (ABAA) decided to combine the convenience of online commerce with the community of in-person book fairs. The 44th Boston Book […]

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Ballets Russes: a gift to Modernism

November 9, 2022

The arrival in Europe of the Ballets Russes led by impresario Sergei Diaghilev on the eve of the First World War, revived interest in the ballet and launched the modern era in performance dance. Ballets Russes is widely regarded as the most influential ballet company of the 20th century as well as an important promoter […]

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Our Nobel Prize Nominations of the Literature Laureates

September 19, 2022

Historical data shows that demand for the works of the Nobel laureates tend to increase in the weeks immediately following the Swedish Academy’s announcement. That is because there are many aspiring Nobel laureate collectors who rush to add some of the latest winner’s offerings to their collections. On a broader scale, readers are generally interested […]

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Father of the American Hard-boiled Detective Stories

August 29, 2022

Famous authors, whose writings are colored by fictional portrayals of their own real life experiences, are plentiful. Often, authors turn themselves into characters in their fictional novels because they have unique, interesting life stories to write about.  Kurt Vonnegut, for example, who appears as a character in his novel Breakfast of Champions, interacts with several […]

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