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.
The Vanguard Experiment was designed to prove that mutual funds could operate independently, and do so in a manner that would directly benefit their shareholders.
Don't invest in what you don't know. Learn first then invest.
Finance that only talks to itself & deals with each other becomes socially useless
Nothing is simpler than owning the stock market and holding it forever, and that's essentially the idea behind the index fund.
I do not understand where the backing of Bitcoin is coming from. There is no fundamental issue of capabilities of repaying it in anything which is universally acceptable, which is either intrinsic value of the currency or the credit or trust of the individual who is issuing the money, whether it's a government or an individual.
If you wait to see how much money you have left at the end of the month to put toward savings, the answer may be zero. So, set up an automated monthly transfer from your checking to savings account. Once you lock into that commitment, you'll be forced to scale back spending to make ends meet.
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