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Thinking in a foreign language could make decision more rational


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Thinking in a foreign language could make decision more rational

 
 
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 Nicolas11 
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Traders, like everybody, shall face psychological biases.

For instance:
People fear to make pain real, so they prefer solutions in which pain is only a probability (even if pain is bigger and probability is high) to solutions in which a small pain is guaranteed.
People prefer to make gain real, so they prefer solutions in which gain is guaranteed to solutions in which gain is only possible (even if it is a higher gain with high probability).

In trading, it translates to: traders have difficulties to cut losers and let winners run.

According to the below article, these biases could be more or less neutralized if the traders thinks in a foreign language.

Source : https://arstechnica.com:443/science/news/2012/04/thinking-in-foreign-language-makes-decisions-more-rational.ars


Quoting 

Thinking in foreign language makes decisions more rational
By Brandon Keim, wired.com

To judge a risk more clearly, it may help to consider it in a foreign language.

A series of experiments on more than 300 people from the US and Korea found that thinking in a second language reduced deep-seated, misleading biases that unduly influence how risks and benefits are perceived.

"Would you make the same decisions in a foreign language as you would in your native tongue?" asked psychologists led by Boaz Keysar of the University of Chicago in an April 18 Psychological Science study.

"It may be intuitive that people would make the same choices regardless of the language they are using, or that the difficulty of using a foreign language would make decisions less systematic. We discovered, however, that the opposite is true: Using a foreign language reduces decision-making biases," wrote Keysar’s team.

Psychologists say human reasoning is shaped by two distinct modes of thought: one that’s systematic, analytical and cognition-intensive, and another that’s fast, unconscious and emotionally charged.

In light of this, it’s plausible that the cognitive demands of thinking in a non-native, non-automatic language would leave people with little leftover mental horsepower, ultimately increasing their reliance on quick-and-dirty cogitation.

Equally plausible, however, is that communicating in a learned language forces people to be deliberate, reducing the role of potentially unreliable instinct. Research also shows that immediate emotional reactions to emotively charged words are muted in non-native languages, further hinting at deliberation.

To investigate these possibilities, Keysar’s team developed several tests based on scenarios originally proposed by psychologist Daniel Kahneman, who in 2002 won a Nobel Prize in economics for his work on prospect theory, which describes how people intuitively perceive risk.

In one famous example, Kahneman showed that, given the hypothetical option of saving 200 out of 600 lives, or taking a chance that would either save all 600 lives or none at all, people prefer to save the 200—yet when the problem is framed in terms of losing lives, many more people prefer the all-or-nothing chance rather than accept a guaranteed loss of 400 lives.

People are, in a nutshell, instinctively risk-averse when considering gain and risk-taking when faced with loss, even when the essential decision is the same. It’s a gut-level human predisposition, and if second-language thinking made people think less systematically, Keysar’s team supposed the tendency would be magnified. Conversely, if second-language thinking promoted deliberation, the tendency would be diminished.

The first experiment involved 121 American students who learned Japanese as a second language. Some were presented in English with a hypothetical choice: To fight a disease that would kill 600,000 people, doctors could either develop a medicine that saved 200,000 lives, or a medicine with a 33.3 percent chance of saving 600,000 lives and a 66.6 percent chance of saving no lives at all.



Nearly 80 percent of the students chose the safe option. When the problem was framed in terms of losing rather than saving lives, the safe-option number dropped to 47 percent. When considering the same situation in Japanese, however, the safe-option number hovered around 40 percent, regardless of how choices were framed. The role of instinct appeared reduced.

Two subsequent experiments in which the hypothetical situation involved job loss rather than death, administered to 144 native Korean speakers from Korea’s Chung Nam National University and 103 English speakers studying abroad in Paris, found the same pattern of enhanced deliberation. "Using a foreign language diminishes the framing effect," wrote Keysar’s team.

The researchers next tested how language affected decisions on matters of direct personal import. According to prospect theory, the possibility of small losses outweigh the promise of larger gains, a phenomenon called myopic risk aversion and rooted in emotional reactions to the idea of loss.

The same group of Korean students was presented with a series of hypothetical low-loss, high-gain bets. When offered bets in Korean, just 57 percent took them. When offered in English, that number rose to 67 percent, again suggesting heightened deliberation in a second language.

To see if the effect held up in real-world betting, Keysar’s team recruited 54 University of Chicago students who spoke Spanish as a second language. Each received $15 in $1 bills, each of which could be kept or bet on a coin toss. If they lost a toss, they’d lose the dollar, but winning returned the dollar and another $1.50—a proposition that, over multiple bets, would likely be profitable.

When the proceedings were conducted in English, just 54 percent of students took the bets, a number that rose to 71 percent when betting in Spanish. "They take more bets in a foreign language because they expect to gain in the long run, and are less affected by the typically exaggerated aversion to losses," wrote Keysar and colleagues.

The researchers believe a second language provides a useful cognitive distance from automatic processes, promoting analytical thought and reducing unthinking, emotional reaction.

"Given that more and more people use a foreign language on a daily basis, our discovery could have far-reaching implications," they wrote, suggesting that people who speak a second language might use it when considering financial decisions. "Over a long time horizon, this might very well be beneficial."


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Lornz's Avatar
 Lornz 
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"The researchers believe a second language provides a useful cognitive distance from automatic processes, promoting analytical thought and reducing unthinking, emotional reaction."

I think that is the key. I've thought about this a lot while living abroad.

After a while my "inner voice" changes its mother tongue, but until that happens I have to translate my thoughts on the fly. As this requires more cognitive effort than blurting out something without having to think, it is easier to avoid falling prey to one's own emotions.

I would argue that this is more about taking a little time to reflect than it is about language. It's about avoiding the shortcuts one's brain often likes to take, and turning off the autopilot. Various cognitive training methods are quite effective to reduce that problem.

In today's fast-paced world, it is getting increasingly harder to find the focus required to succeed at complicated tasks.
Einstein said: "It's not that I'm so smart, it's just that I stay with problems longer. ".

The world is increasingly growing allergic to thinking, and all we do is memorize or shuffle data around:
https://www.nytimes.com/2011/08/14/opinion/sunday/the-elusive-big-idea.html?pagewanted=all

That's not to say that data isn't interesting (https://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?pagewanted=all), but it, in my opinion, the metadata is where the really intriguing information is.

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 ThatManFromTexas 
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@Nicolas11
@Lornz

Yea , well ... most Americans only speak "American"... Sooooo ....uppity multilingual foreigners and ...uh... educated people no matter where they are from ... shouldn't complain about our closed mind -preconceived notions-biased opinion decision making process.... we be thinking and speaking fine....

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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 Lornz 
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ThatManFromTexas View Post
@Nicolas11
@Lornz

Yea , well ... most Americans only speak "American"... Sooooo ....uppity multilingual foreigners and ...uh... educated people no matter where they are from ... shouldn't complain about our closed mind -preconceived notions-biased opinion decision making process.... we be thinking and speaking fine....

My claim is that metathinking is the issue here, not language. I think the results also applies people speaking "mathematics", e.g.

By the way, I ain't said that Americans don't got no thinking prowess....

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 ThatManFromTexas 
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Nicolas11 View Post
Traders, like everybody, shall face psychological biases.

For instance:
People fear to make pain real, so they prefer solutions in which pain is only a probability (even if pain is bigger and probability is high) to solutions in which a small pain is guaranteed.
People prefer to make gain real, so they prefer solutions in which gain is guaranteed to solutions in which gain is only possible (even if it is a higher gain with high probability).

In trading, it translates to: traders have difficulties to cut losers and let winners run.

According to the below article, these biases could be more or less neutralized if the traders thinks in a foreign language.

Source : Thinking in foreign language makes decisions more rational


Lornz View Post
My claim is that metathinking is the issue here, not language. I think the results also applies people speaking "mathematics", e.g.

By the way, I ain't said that Americans don't got no thinking prowess....

@Lornz

I understood what you said, you stated your case very well.

I was poking fun at the fact that most "foreign" business people I have met over the years speak multiple languages but Americans insist everyone speak English. We even pass laws making English the Official language.

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
 
 
Lornz's Avatar
 Lornz 
Oslo, Norway
 
Experience: Advanced
Platform: CQG, Excel
Trading: CL
Posts: 1,193 since Apr 2010


ThatManFromTexas View Post
@Lornz

I understood what you said, you stated your case very well.

I was poking fun at the fact that most "foreign" business people I have met over the years speak multiple languages but Americans insist everyone speak English. We even pass laws making English the Official language.

I understood that you understood what I meant... There's research indicating that bilingualism may have an effect on intelligence. (Suck on that, you dirty yanks! )

However, my point was the opposite of yours; it would be better for the world if everyone spoke the same language (but hopefully different dialects)...

Or maybe I'm wrong? Maybe the only thing preventing WWIII is what gets lost in translation...

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 ThatManFromTexas 
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Lornz View Post
... it would be better for the world if everyone spoke the same language...

@Lornz

Fine with me... as long as everyone has to learn the one I already know....

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"

 



Last Updated on April 30, 2012


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