Fictive

Fictive learning sounds like something you’d do surreptitiously, but according to an article in Wired Magazine on the neuroscience of why intelligent people respond to financial bubbles, it’s not only a key contributor to that type of event, it’s also a basic evolutionary trait.

If your ancestor found that standing here made it easier to club that mastodon for dinner than standing over there, that ancestor was more likely to stand here next time, too. And when he clubbed that mastodon successfully - possibly doing the primitive equivilent of the fist-pump as the beast collapsed - he got a rush of reinforcement in a part of the brain that 'rewards' us when we do something that's perceived as good. That same part of the brain flashes when we do something that earns us more money than we had any reason to expect, in the financial market, making it more likely that we'll try whatever maneuver got us that rush, the next time that the opportunity arises. We can even get this rush second-hard when we see others doing well -- we think if I did what he did, I'd be buying that new Beemer, just like him! -- again, making it more likely that next time, we will do that.

The article could have been a little more detailed, with some insight into not only the psychology of the process when it's in full swing, but the flow of events that trigger the determination that this is a bubble, after all -- holy hell, the emperor's naked! Bail out! Bail OUT!!! -- would have been nice, but it's an interesting article anyway. It can be found here.