We invest like baboons, with and without duties

Trump's duty ballet has and will continue to rock the financial markets. In order to understand how to avoid panic or euphoria, studies by biologist Laurie Santos, head of Yale's Comparative Cognition Laboratory, come to the rescue. Her research focuses on the evolutionary origins of the human mind. Before understanding the link between the study of baboons and human financial decisions, one question must be answered. Why do we study primates? Among the many species of baboons, we study the Macaque Rhesus. This particular ape shares 93% of its DNA with humans. It is the most genetically similar species to Sapiens. Studying this primate allows us to understand the most innate behaviours in humans, those that have remained with us throughout evolution. It is a snapshot of our most ancient root.

Macaques live in groups. Members work together to protect themselves from predators, search for food and maintain social bonds. Monkeys have a definite social hierarchy. But that is not all. These primates have an extraordinary capacity for learning. Among the various things they learn very easily is money. This is not a typo. Macaques easily learn how to use money. They exchange copper coins for fruit or other foods. They learn the 'fungibility' of money, i.e. the possibility of exchanging different amounts of coins for different types of fruit. They learn that if they can solve a certain problem or do a certain task, they acquire coins. The quantity of coins depends on the quality of the solution or the time to accomplish a certain task. Laurie and his colleagues had fun creating a macaque economy.

Dr Santos has shown that baboons invest like human beings. In practice, when they are afraid of losing their money, they literally tend to go mad, mimicking each other. This is 'panic selling'. They become greedy when they realise that with a few coins they can buy a lot of fruit. It is the realm of greed. These reactions happen to macaques even when they have set aside a good sum of money to 'buy' a lot of their favourite fruit. Apes regulate their financial behaviour by activating biases, emotional interference and imitation tendencies of their more evolved cousins, the sapiens. How to translate these comparative analysis studies into today's financial context?

It has been shown that in order to mitigate irrational behaviour, it is essential to take a long-term view, ignoring extreme daily fluctuations, duties or no duties included. Limiting access to apps that give minute-by-minute trends allows one to invest in the light of one's objectives and be less influenced by the market momentum of extremism. The strategy of 'decision delay' also counteracts the tendency to imitate. The advice is simple. It consists of avoiding making important financial decisions based on recent news by postponing them. Postponing the decision by a week, sometimes even a month, improves rationality. What at first glance seems like procrastination, is a blink of an eye when one considers how the financial market has performed over time. Putting decisions on hold is often the best option. The absolute most powerful strategy for making better decisions is the constructive relationship. In people-to-people comparisons, many irrational decisions are diluted if one communicates rather than hysterically imitating one another. Communicating challenges gut decisions, allows one to explore less impulsive alternatives, sometimes mocking excesses, one increases the rate of rationality. It is true that apes invest like humans. But humans have the language to build relationships and greater self-control skills, postponing all decisions in the face of incomprehensibility. This increased rationality is the 7% of DNA that differentiates us from our furry cousins. A 7% that makes all the difference, especially when we need to hold our 'nerve' and not act like 'baboons', duties or no duties.

Lorenzo Dornetti is director of Neurovendita Lab.