Behavioral Science for Hedge Fund Executives Hints At the Prospect of New Social Environments-Predictive Modeling Algorithms Sho
Posted Dec 13 2010 12:23pm
I found this article to be of interest as in healthcare we are constantly focusing on behavioral modifications for the US consumer to live healthier and more productive lives and in this article the same prospect is being discussed for investors who in another way have some unhealthy behaviors. Gee we could certainly use some of the analytical “scoring” and “risk” assessments that the health insurers push for with their algorithms to perhaps begin projecting the behavior patterns of some of these folks.
Just think, when one would consider doing business with a hedge fund individual, you could have their full predictive model laid out in front of you as far as how often they tend to break the law, what percentage of their actions entail the consideration of ethics. a full analysis of their current environment, and why not throw in being able to buy and sell the medication records of some of these individuals too so we know that the person we are dealing with at the hedge fund has a diabetes or cholesterol problem so we might be further tuned in to how they might react on some issues. <grin>.
It would be great to know as an investor to see a model that would predict how often they might be leaning toward breaking laws and how often they might be tempted by insider information, after all this is what makes or breaks the bank. We could further elaborate here on whether or not their personal business model shows whether or not they have a conscious. We talk about almost all of these issues for better health and people with health also invest. With all the data hungry folks out there wanting all the healthcare information on the general consumers today, perhaps hedge fund personality modeling could be combined here to provide the best of both worlds and you know, selling their data could in fact bring in some really good dollars. <grin>.
Sure this may sound a bit selfish, but this is what the algorithmic formulas for healthcare are all about too so if this is going to be the model for care and clinicians to work with, why not take this to the next level so those wanting to do business with hedge fund managers have the total inside scoop on who they are potentially doing business with, do these people have a conscious and how will they respond to pressure and further more, do they take anti depressants? As an investor, would you want to do business with an individual who is currently taking Prozac or some other anti depressant and what is their therapy model and how does it affect their choices and thinking?
Of course with taking some drugs you might be looking at some different behaviors versus those who do not. Just think if we could use software like in the link below, an individual when speaking to their representative could anticipate some of their behavior at the hedge fund, and the software also says it can identify prostate cancer, so again when spending your money as as investor with a hedge fund, using this software could help you avoid those subject to getting prostate cancer, again you don’t want this to occur in the middle of your deal. Gee just listening to their voice might clue you into what kind of investment they are going to recommend. <grin>.
“According to Levanon, a person with prostate cancer has a "Grand Canyon" of missing tones that is "catastrophic to the voice."
Furthermore, is this person at the hedge fund being complaint with taking their medications? If you are plunking down a lot of money you may want to know if he/she has been regularly missing their Prozac which could lead to some real sporadic behavior.
If you have not figured out the purpose of this post yet, then read up on behavioral healthcare and how the health insurers use it to bank on and again, why not be transparent in this effort and allow such models to function from the other side of the table with each hedge fund individual offering their health information to be shared to attract more clients, it is what’s being sold on the other side of the table. Would you like to know the “score” of your representative?
I’m sure Elizabeth Warren would love to be able to analyze some of this too with her job of helping protect consumers, predictive modeling with hedge fund behavioral pattern studies and analytics, how will they compute and how physically healthy are they as you may again not want to rely heavily on those individuals at hedge funds who are not getting their annual PSA, cholesterol, mammograms and other related tests too as you certainly don’t want an individual to end up in the hospital or pass away in the middle of your big deal when big dollars are involved. Again, this is the same stuff that healthcare algorithms are attempting to produce with all their patient data. If you don’t think this is alive and well, here’s a few links from prior posts that may help bring you up to speed.
This company is putting out a 3 Million dollar reward for those who can come up with award winning predictive models on relative to re-admittance to the hospital, so just think if your hedge fund manager was in the hospital, would you want to know as an investor what his/her odds of a return trip would be for the person you are doing business with? You bet you would if again there’s a lot of money riding on the table.
Does your hedge fund manager suffer from incontinence? Is he/she going to have to run to the bathroom in the middle of a big deal? Informed consumers might want to know that and of course there’s the respect for privacy here too as it would be and elective position of all to share their information too. How healthy is your representative and how would they compare to the next person? Is there a market for companies like WebMD or other companies to sell this kind of data? Just some questions that came to mind as there seems to be no limit today on what is marketed.
You know I might also say how about some behavioral models on our members of Congress too, it’s all the same analytics processes with algorithmic formulasso let’s share the love with our hedge fund individuals handling such big sums of money and see if they are both perhaps mentally and physically fit to handle your investments and why not let them compete against each other too?
This has been a fun little exercise here in suggesting some new models and to perhaps turn the tables a little on what analytical formulas are being use today and how they are analyzed. I think we have finally reached the point to where the next 12 step program needed just might be “data addiction”.
Healthcare organizations that are funded by hedge funds might find this type of information very useful as well to somewhat predict what their hedge fund manager might be up to and recommend some preventive healthcare for the hedge fund managers if they are not compliant with their current treatments and could offer solutions for them, again in the hope that better decisions with ethics included are the ultimate outcome here. There’s a lot of health riding on all of this and again today with predictive modeling this could be an analytical solution that gives some business intelligence back to healthcare. <grin>.
Recognizing that hedge funds present social environments that encourage unethical behavior allows us to identify new and better ways to address the perennial problem of insider trading. For example, because traders listen to instructions from their managers and investors, insider trading would be less of a problem if those managers and investors could be given greater incentive to urge their own traders to comply with the law, perhaps by holding the managers and investors — not just the individual traders — accountable for insider trading. Similarly, because traders mimic the behavior of other traders, devoting the enforcement resources necessary to discover and remove any "bad apples" before they spoil the rest of the barrel is essential; if the current round of investigations leads to convictions, it is likely to have a substantial impact on trader behavior, at least for a while. Finally, insider trading will be easier to deter if we combat the common but mistaken perception that it is a "victimless" crime.
As the example of hedge fund insider trading shows, a solid understanding of the social cues that drive prosocial behavior is vitally important to understanding why and when people choose to ignore legal and ethical rules. In the quest for a law-abiding society, we should pay attention not only to incentives but to conscience and the tools that can encourage it — the cheapest and most effective police force one could hope for.