I ran across this utterly fascinating book excerpt on the marginalrevolution blog:
One project is Michael Marcovici’s Rat Trader. The book describes the training of laboratory rats to trade in foreign exchange and commodity futures markets. Marcovici says the rats “outperformed some of the world’s leading human fund managers.” The rats were trained to press a red or green button to give buy or sell signals, after listening to ticker tape movements represented as sounds. If they called the market right they were fed, if they called it wrong they got a small electric shock. Male and female rats performed equally well. The second generation of rattraders, cross-bred from the best performers in the first generation, appeared to have even better performance, although this is a preliminary result, according to the text. Marcovici’s plan, he writes, is to breed enough of them to set up a hedge fund.
I think this bespeaks the utterly rational nature of the market. Humans are irrational. Rats are just doing what they're trained to do, and their feelings (except the avoidance of electric shock or the reward or food) don't play a role.
[daily log: walking, 6.5 km]