By Alan C. Snyder
Shinnecock Partners LP
As published in InvestmentNews
Harvard Business School used to put 800 first-year MBA students through a tank warfare game. The goal was to prove that homo economicus — the concept championed by John Maynard Keynes and other traditional economists which postulates that humans make decisions in life based on the economic payoff they get — doesn't always apply. Behavioral economists instead argue that decision making is far more nuanced. Herd behavior, endowment theory (we disproportionately like what we own) and momentum strategies are just a few of these behavioral anomalies.