Tuesday, March 16, 2010

Tuesday, March 9, 2010

Socionomics defined

Socionomics is the study of social mood and its results in social actions. It studies how waves of endogenously regulated social mood in turn regulate changes in the economy, political preferences, financial markets, pop culture, etc.



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Herding

Herding Impulse

Academics and the media often use the term "herding" differently than socionomists do. Here are some distinctions.

Socionomic Perspective: When do people herd? They herd when they are uncertain. In contexts of uncertainty, the herding impulse drives social behavior. There is an evolutionary advantage to this. If you were unsure if there was any danger around, but all of your friends started running, your chances of survival increased if you, likewise, joined in—otherwise you might be the only one the lion sees. However, there are devastating consequences to this in finance, namely losses. You’ll buy tops and sell bottoms. The herding impulse is based in the amygdala, a part of the brain’s limbic system. It is non-rational, unconscious, endogenously-regulated and impulsive. By “non-rational” we mean that the herding impulse is not based on reason, but is not necessarily “irrational.” As demonstrated in the lion example, there are instances where running with the flock is sensible.

People always herd in financial markets, but not economic markets. In economic markets, people use their rational capabilities to maximize the utility of their resources.

Non-Socionomic Alternative Perspective: Some academics and media writers view herding as rational and conscious. This is the exact opposite of how socionomists theorize it. There’s a significant literature on “Bayesian updating,” which theorizes that sometimes people consciously and rationally ignore their private information and follow the group. While socionomists recognize that this phenomenon may occur, we would not refer to it as “herding,” nor do we think it is a useful way of describing financial markets.

This brings us to an important distinction. According to socionomic theory, not all synchronized group action is herding behavior. While some academics look at the phenomena of people going to the mall when there’s a sale, for example, as herd behavior, our perspective is that the people are simply rationally maximizing the utility of their resources. Socionomists only recognize herding when the behavior is non-rational and performed in the context of uncertainty.



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Socionomics - Social Mood

Social Mood

Social mood is the engine of social action. It is always present. Social mood governs the character of social events. Neurologically, social mood is manifested via the herding impulse in the amygdala, a part of the limbic system.


Social mood waxes and wanes positively and negatively. A positive social mood is associated with a host of social phenomena, such as bull markets, bright colors, short skirts, re-election of incumbents, peace, and deregulation. A negative social mood is also associated with a host of social phenomena, such as bear markets, dark colors, falling hemlines, rejection of incumbents, discord, and regulation.

A subtle but important point: Although social mood governs social events, it fluctuates independently of such events. In other words, wherever mood goes, events will follow. But, the events themselves have no impact on the direction of social mood; there is no feedback loop. If social mood governs social events, what governs social mood? Answer: The Wave Principle.

When we say social mood determines the character of social events, we mean is that the mood determines the general type of events that will emerge, but not the specific events themselves, nor the actions of specific individuals. Here is an example: Socionomic theory predicts that during times of negative social mood, horror movies will be popular. However, we cannot say whether or not a movie studio will green light the feature-length production of a particular horror film. Nor can we say—if the film gets made—that a specific individual will see the movie at his local cineplex.

Www.socionomics.net


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Socionomic Causality

 

This is taken directly from the Socionomics.net website. 

 

Socionomic Causality

Socionomics

Have been going back through Socionomics Institute research. There is a video on their website that is worth taking a few minutes to look at if you want to gain an introduction to their ideas: History's Hidden Engine.

Www.socionomics.net

Ideas have some interesting practical implications for business decision-making.


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