Market mechanisms sometimes amplify rather than correct human cognitive limitations

Evidence

In emphasizing human cognitive limitations, as behavioral finance rightly does, we therefore need also to remember the interactions between those limitations and the mechanisms, both “social” and “technological,” that constitute markets. The interactions by no means always eliminate the effects of the limitations the crises of 1987 and 1998 can be seen as cases in which they exacerbated them but I suspect they are always important. — Donald MacKenzie, An Engine, Not a Camera, 1207

Categorization

• XREF: connects to: Market efficiency fails once attention becomes scarce, requiring corrective intervention — Yves Citton, The Ecology of Attention, 177; Human cognitive limits make simplifying concepts and calculating devices constitutive of complex markets. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1195; Economic performativity rests on human cognitive limits and mutual susceptibility — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1197 (+6 more)

Broader Connections

• Human rationality is bounded by memory and computational limits and often violates rational maxims #expands (0.85) — John T. Jost and Jim Sidanius, Political Psychology, 2408
• Selling predictions of human behavior superseded serving genuine needs in web economics #exemplifies (0.80) — Shoshana Zuboff, The Age of Surveillance Capitalism, 293
• Fairness evolved as a psychological device because outside market options constrain benefit distribution. #exemplifies (0.75) — Nicolas Baumard, A mutualistic approach to morality, 201