NOVA - Official Website ? A set of amazing experiments. The program reveals how our emotions interfere with our decision. Mind Over Money, right now on NOVA. They believe that when it comes to making decisions about money, the human mind often. Shopping online shouldn't cost you peace of mind. Buy from millions of online stores without sharing your financial information. CIA mind control program In 1999. Over the years various theories of conversion and member retention have been proposed that link mind control to some new religious movements. Experiments. show our behavior is bizarre when it comes to money, but not everyone agrees. Mind Over Money, right now on NOVA. ZACH BURNS (University of Chicago): Okay, who's ready? NARRATOR: It's an unusual experiment that challenges. ZACH BURNS: Who. NARRATOR: .. an auction of a twenty dollar bill. Gideon has invited me to take over the NovaMind IP so that the product can continue to help people be more productive and. Nova Mind Software Pty Ltd. Special rates on Centara Nova Hotel & Spa Pattaya Pattaya. Guests over 11 years old are considered as adults. Lobby is open concept which looks great at the 1st glance it probably has the resort theme in mind. Comments about PBS NOVA: Mind Over Money DVD. Affiliate Program; Wholesale Inquiries; Request A Catalog; FOLLOW PBS * List Price is for reference only. No sales may have occurred at this price. BIDDER ONE: One dollar. ZACH BURNS: Do. I hear two dollars? Who's got..? BIDDER TWO: Two dollars. ZACH BURNS: Do. I hear three? NARRATOR: The rules are simple. The highest bidder. BIDDER SIX: Ten. ZACH BURNS: Eleven? Do I hear 1. 3? BIDDER FIVE: Thirteen. NARRATOR: But there's a catch. ZACH BURNS: Thirteen. NARRATOR: The second highest bidder receives nothing but. ZACH BURNS: Do. I hear 2. 0? BIDDER SEVEN: Twenty. ZACH BURNS: Twenty. NARRATOR: Amazingly, two participants bid way above the. BIDDER EIGHT: Twenty- six. ZACH BURNS: Twenty- six! BIDDER SEVEN: Twenty- seven. ZACH BURNS: Twenty- seven. BIDDER EIGHT: Twenty- eight. ZACH BURNS: Twenty- eight! JENNIFER LERNER: We see a variety of ways in which people depart. People are not using the information they say they should be. I'm going to measure your skin temperature. NARRATOR: The notion that people can behave. The. intellectual heart of this philosophy is here at the University of Chicago. Nearly all of them share a common assumption. One. of the great champions of this view is Gary Becker. GARY BECKER (University of Chicago): The most powerful theory we have, and I think. JOHN COCHRANE (University of Chicago): So what is economics? Economics is a way of. NARRATOR: University of Chicago professor John. Cochrane is another leading proponent of this rational model of economics. JOHN COCHRANE: And how do we do it? We start by thinking about people and by. How do. they go about getting it? NARRATOR: It's a model first revealed 2. Adam Smith, in his book Wealth of Nations. JOHN COCHRANE: He started economics in a way that Newton and. Galileo started physics. He defined our field, in some sense, and came across. NARRATOR: So what did Adam Smith mean by rational and. Take an average person in today's world. He's. constantly calculating ways to increase his wealth. GARY BECKER: Adam Smith basically said people are rational. NARRATOR: Before he makes a purchase, he works out. Be it a cab ride or buying stocks, his. And, while he has emotions, they. For Smith, individuals. GARY BECKER: He put it all together and he ended up with. I mean, you know, economists over the years have. Adam Smith really had the basic insight. NARRATOR: Two centuries later, economics has evolved. JOHN COCHRANE: Having understood behavior, having thought. NARRATOR: And Smith's insights into how rational. JUSTIN FOX (Harvard Business Review): Starting after. World War II, you had to say it mathematically if you were going to be taken. Economics, from the very beginning, had been the study of rational. And it turns out. NARRATOR: Today, these mathematical models are the. Behavioral. critics of these models believe they take Adam Smith's insights to an extreme. ROBERT SHILLER (Yale University): They represent people as doing immense calculations. NARRATOR: The main model of consumer behavior assumes. ROBERT SHILLER: What are you talking about? What interest rate. I have in my head? That's the kind of thing that the models require that. NARRATOR: Rational economists concede that people don't. JOHN COCHRANE: We're not assuming that the people in the real. NARRATOR: Behavioral economists like Richard Thaler. RICHARD THALER (University of Chicago Booth School of. Business): Defending. Now, that's ridiculous. Let's take an easy shot, like this. I might be. able to make this shot, and an expert would make it. I can make it too, but let's. I want to put this ball in this pocket. Now, I know. the trigonometry; I've got to get the angles right and so forth. An expert. would have no problem with it, but for me, this is a pretty hard shot. When people face hard problems. NARRATOR: At the center of all the rational models. The idea is to keep regulation and. Wall Street. Rational. GARY. BECKER: It lifted maybe a billion people out of real. I mean real poverty, but they had one dollar a day or two dollars. And it lifted those people above those limits. ARCHIVE AUDIO NEWS CLIP: What in the world is happening on Wall Street? NARRATOR: Then comes the crash of 2. ARCHIVE AUDIO NEWS CLIP: Investment traders say they've never seen. NARRATOR: The stock market drops over 4. ARCHIVE AUDIO NEWS CLIP: The Dow traders are standing there, watching in. I don't blame them. ARCHIVE AUDIO NEWS CLIP: Traders here, working the phones, say a lot of. Dow will go. NARRATOR: .. ARCHIVE AUDIO NEWS CLIP: Let's talk about the speed with which we're. NARRATOR: Fourteen- trillion dollars of wealth invested. Americans is destroyed. ARCHIVE AUDIO NEWS CLIP: This has truly been a manic Monday on Wall. Street. NARRATOR: Fear grips the markets. ARCHIVE AUDIO NEWS CLIP: The stock market suffered one of its worst days. NARRATOR: And financial experts are forced to imagine. ARCHIVE AUDIO NEWS CLIP: We haven't seen anything like this since the. Great Depression. NARRATOR: .. the global economy coming to a halt. LEO MELAMED (Chicago Mercantile Exchange): I shudder to think if all of that stopped. The. consequences are beyond imagination: there would be hunger; there would be war. ARCHIVE AUDIO NEWS CLIP: We're having an electronic run on the banks. LEO MELAMED: It would put the world back a hundred years, maybe. NARRATOR: The chaos seems to undermine decades of. GARY BECKER: Economists as a whole didn't see it coming. So. that's a black mark on economics, and it's not a very good mark for markets. ARCHIVE AUDIO NEWS CLIP: This market took five years to go higher; it's. NARRATOR: With the crash, the rift in economics widens. ARCHIVE AUDIO NEWS CLIP: We are talking about financial Armageddon. JENNIFER LERNER: The crash really matters, because much of the. JOHN COCHRANE: I'm sorry, that's such an empty argument. That's. just an insult, a pointless insult. EUGENE FAMA: I don't see this as a failure of economics, but. It's fine. NARRATOR: So which side is right? Are we rational. about money, or do our emotions and psychology play a much bigger role than. ZACH BURNS: Okay. NARRATOR: Take the auction of the 2. ZACH BURNS: Do. I hear one dollar? BIDDER ONE: One. ZACH BURNS: How. BIDDER TWO: Two. NARRATOR: In the rational model, a person should never. ZACH BURNS: Six? ZACH BURNS: Eleven? Do I hear 1. 3? NARRATOR: It's the emotional desire to win that drives. ZACH BURNS: Fourteen? Twenty dollars. NARRATOR: And fear of being the loser drives them even. BIDDER EIGHT: 2. BIDDER SEVEN: What. ZACH BURNS: And. RICHARD THALER: Nobody will want to play that game twice. NARRATOR: The auction may seem far removed from. We. asked shoppers in a Chicago mall if they would prefer $1. MALL SHOPPER ONE: I'll take the $1. MALL SHOPPER TWO: A hundred and two dollars. MALL SHOPPER THREE: Year plus a day. MALL SHOPPER FOUR: I mean, I can wait that extra day for it, the $1. MALL SHOPPER FIVE: It really wouldn't make any difference. MALL SHOPPER SIX: I would do the 1. NARRATOR: They all made the rational decision.. MALL SHOPPER SIX: What's one day after a whole year of waiting? NARRATOR: .. and chose the bigger amount. Then they. were asked if they would prefer $1. The larger amount. So what did they say? MALL SHOPPER ONE: I'll take $1. MALL SHOPPER SIX: I would take $1. MALL SHOPPER FOUR: I would prefer the $1. MALL SHOPPER THREE: Today. MALL SHOPPER FIVE: I'm taking the $1. NARRATOR: The desire for a quick reward.. MALL SHOPPER SIX: One hundred dollars today. NARRATOR: .. trumps. RICHARD THALER: There's something called . Unwittingly, they have been influenced by a completely. RICHARD THALER: It is a great illustration of anchoring. People. are anchored on some number they were given, even when they constructed it at. It's an. almost irresistible force. NARRATOR: Do experiments like these expose flaws in. GARY BECKER: They're dealing with people in the lab. Economists. are dealing with people in the real world, and there's a difference between the. JOHN COCHRANE: These experiments are very interesting, and I. The next question is, to what extent does what we. Their decisions move prices up and down. Richard. Rosenblatt's been trading here for 3. RICHARD ROSENBLATT (New York Stock Exchange): When I started, the technology was electric. And yet it's still the same job: trying to anticipate. And if I'm right, and I buy a stock in. I'll. realize a profit. NARRATOR: Now, the stock exchange is one small cog in. Technology means trading. KNIGHT CAPITAL GROUP TRADER ONE: Trading on two bucks on earnings; we've got 1. NARRATOR: At Knight Trading, one of the biggest. KNIGHT CAPITAL GROUP TRADER ONE: You know what? I have stuff in the opening. I. won't pay over that. KNIGHT CAPITAL GROUP TRADER TWO: Eight dollar, two on the upside on eight. Sell! NARRATOR: And just as Adam Smith suggested, traders. JOE MAZZELLA (Knight Capital Group): You want to win. And it's the competitive. You know. as the room gets busier and busier, and the noise starts to elevate, if I'm. I'm not that active, and I see somebody next to me who's. I am, it gets me going. KNIGHT CAPITAL GROUP TRADER THREE: Hey, Tommy! The 3. 8,0. 00 guy added 5. KNIGHT CAPITAL GROUP TRADER FOUR: T. X. M. Twenty- three- ninety for. NARRATOR: Why does it matter what happens in places. The. firms that sell us these products take our money and invest it to make more. If traders make profits for these financial. But what if this model of human behavior isn't. ARCHIVE AUDIO NEWS CLIP: Stocks shot higher, giving the Dow its best day. NARRATOR: In 2. 00. Times are good and have been for years. ARCHIVE AUDIO NEWS CLIP: There's a hot real estate market in many parts. NARRATOR: Many think the long boom will continue. ARCHIVE AUDIO NEWS CLIP: Earnings jumped almost eight- fold. ARCHIVE AUDIO PRESIDENT GEORGE W BUSH NEWS. CLIP: Our economic horizon is.
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