STREET DOGS: Brains love long shots
The latest scientific research on dopamine has implications for investors
The latest scientific research on dopamine has implications for investors. First, it shows that our brains love long shots. The less likely or predictable a reward, the more active our dopamine neurons become and the longer they fire, flooding our brain with a soft euphoria. "That positive reinforcement," says Wolfram Schultz, a neurophysiologist at the University of Cambridge, "creates a special kind of attention dedicated to rewards – that keeps you coming back for more." It’s what makes you willing to take risks. Without it you would probably keep all your money under a mattress. The dopamine rush we get from long shots is why we play the lottery, invest in initial public offerings, keep too much money in too few stocks and invest with active portfolio managers instead of index funds. Even if you’ve never experienced a big score, you’re wired to want them. Dopamine makes winning big feel vastly better than just winning — and the prospect of its euphoric effect prevents us from fo...
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