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Market mind reading

Business, Company Strategy, Economics, Markets

Regular readers of my blog might have seen last week’s post linking through to the New Scientist article about research into new ways of assessing how markets behave. Prompted by the irrationally steep falls triggered by the credit crisis (or maybe they were reverse – the previous high valuations were based on irrationality, leading to a return to ‘fair value’), the research looks at herd behaviour. Researchers are trying to quantify the influence of rumours over privately held views and verified and publicly available information.

Now The Eonomist has written about neuroeconomics – the emerging science of using magnetic resonance imaging (MRI) scans to study how emotions affect behaviour.

Companies in years to come might be able to install hidden MRI devices that can map the feelings – and therefore the likely buying or selling positions – of suppliers, customers and competitors.

Imagine waking up in the morning, ringing up your ethylene customer and saying “My offer price is $1,150 FOB Korea only to be told “I know already and I know this is irrational and not based on your real cost position. Did you have an argument with your wife last night?