The economists of the world make on amazingly stupid assumption: “Man is a rational animal” and this leads them to a belief ‘therefore he will do things which are best for him’. This means he will: a) choose the most profitable options – financially rational b) he will take a long term view of things […]

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One very important fallacy is called the ‘Sunk cost fallacy’ – which makes us throw more good money after money already gone bad. Typically a lender keeps lending money to one customer hoping that this will enable the borrower to do well and repay ALL the money. Another manifestation of this is called ‘Averaging’ – […]

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