economics and corporate finance professors who still believe in the “hard-form

efficient market hypothesis” will retain their original belief. If so, this will

be one more indication of how irrational smart people can be when influenced by

psychological tendencies.

 

My sixth question is: Don’t moral and prudential problems come with knowledge of

these psychological tendencies?

 

The answer is yes. For instance, psychological knowledge improves persuasive

power and, like other power, it can be used for good or ill. Captain Cook once

played a psychology-based trick on his seamen to cause them to eat sauerkraut

and avoid scurvy. In my opinion, this action was both ethical and wise under the

circumstances, despite the deliberate manipulation involved. But ordinarily,

when you try to use your knowledge of psychological tendencies in the artful

manipulation of someone whose trust you need, you will be making both a moral

and prudential error.

 

The moral error is obvious. The prudential error comes because many intelligent

people, targeted for conscious manipulation, are likely to figure out what you

are trying to do and resent your action.

 

My final question is: Aren’t there factual and reasoning errors in this talk?

 

The answer is yes, almost surely yes. The final revision was made from memory

over about fifty hours by a man eighty-one years old, who never took a course in