Banks are run by executives, and executives protect themselves, and that does not always mean that banks are going to behave rationally.
Interpretation
Executives prioritize their own interests, which can lead to irrational banking behaviors.
In this quote, Daniel Kahneman highlights the ingrained self-protective tendencies of bank executives that can influence decision-making within financial institutions. This may result in irrational behaviors that do not always serve the best interests of the bank's stakeholders or the broader economy.
In practice
In a discussion about corporate ethics, this quote can be used to illustrate how executives may make self-serving decisions.
We think, each of us, that we're much more rational than we are. And we think that we make our decisions because we have good reasons to make them. Even when it's the other way around. We believe in the reasons, because we've already made the decision.
The average investor's return is significantly lower than market indices due primarily to market timing.
Laziness is built deep into our nature.
Through some combination of culture and biology, our minds are intuitively receptive to religion.
You are more likely to learn something by finding surprises in your own behavior than by hearing surprising facts about people in general.
It's very easy for trusted companies to mislead naive customers, and life insurance companies are trusted.
Don't invest in what you don't know. Learn first then invest.
Gold is money and nothing else.
We need a mutual fund industry with both vision and values; a vision of fiduciary duty and shareholder service, and values rooted in the proven principles of long-term investing and of trusteeship that demands integrity in serving our clients.
Credit is a system whereby a person who can not pay gets another person who can not pay to guarantee that he can pay.
The propensity to swindle grows parallel with the propensity to speculate during a boom the implosion of an asset price bubble always leads to the discovery of frauds and swindles
Don't try to buy at the bottom and sell at the top. It can't be done except by liars.
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