A lot of my work in the 80's had to do with human cognition and how it affects our understanding of phenomena - the interaction of the observer with the system being observed, both at the micro scale where the methods of investigation disturb the system in some way, and at the macro level, for example in anthropology, where the presence of the anthropologist affects the behaviour of the people being studied.

To sum it up in one phrase, why do we believe the things we believe? What influences, cultural, material, psychological and so forth, inform our way of thinking, and how does this determine our interaction with others, and with the material world? More importantly, can we escape these boundaries, or are we forever doomed to repeat the same patterns?

It's fairly easy to see how this applies to economics, but not so easy to get at the root of it. Von Mises made a good start with Human Action, but there's a lot he couldn't cover owing to the time in which he lived. What is the effect on economic policy, for example, of instantaneous information retrival, such as you see with the internet today? For example, how does this influence the behavior of central bankers, who previously only had to concern themselves with a limited number of information channels (newspapers, radio) most of which they were able to control via political or other means. Or take another example, the difference between war reporting in WWII, and the Vietnam War. How did the differences in style and motives, and the media channels involved (TV vs Radio) affect the viewpoint of the folks at home?

Obviously this branches into a study of media, and what effects the various media have on our decision making. It's a long road from tipsters in 1920's bucket shops to CNBC money honeys for example. The mere fact of near total involvement of the public today compared to then is another aspect of the phenomena that receives very little attention.

I could go on (and on, and on...) but that basically sums up what I look at when analyzing "the markets." For me, the markets are a microcosm of human behaviour, which is how Von Mises viewed it, so you have to start with human behaviour, which is informed by perception, which leads to a study of cognition and the question of why we believe the things we do.

Does that clear anything up, or do I just sound like some muddled academic who dabbles in stocks?

ebear