The pigeon in every investor

If even pigeons can develop superstitions in the face of random events, investors can surely do so, too. In 1948, the renowned behavioural scientist B.F. Skinner conducted a fascinating experiment with pigeons that, seventy-five years later, offers some insights into investor behaviour, at least to me. Instead of rewarding the birds for specific actions, Skinner randomly gave them food. The results were remarkable: six out of eight pigeons developed elaborate 'superstitious' behaviours, convinced their peculiar actions somehow triggered the food delivery. One pigeon would spin counter-clockwise around its cage two or three times. Another repeatedly thrust its head into a corner of the cage. A third developed an odd tossing motion as if lifting an invisible bar with its head. Two others swung their heads from side to side in a pendulum motion. Each bird, in its way, had created a ritual it believed would bring rewards. You're not alone if this reminds you of investor behaviour during market volatility. Like Skinner