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 enthusiasm for Tesla and other bubble-basket stocks is reminiscent of the March 2000 dot-com bubble. As was the case then, the bulls rejected conventional valuation methods for a handful of stocks that seemingly could only go up. While we don't know exactly when the bubble will pop, it eventually will.
Never, ever invest money that you will need prior to three to five years - minimum.
There are no shortcuts when it comes to getting out of debt.
Don't try to buy at the bottom and sell at the top. It can't be done except by liars.
If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.
All the time and effort people devote to picking the right fund, the hot hand, the great manager have, in most cases, led to no advantage.
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