We are all participants in this economy. In the financial markets, we are oscillate between fear and greed: the fear of losing everything and the desire to achieve the maximum reward for the risk. At the core of this rollercoaster lies the recognition that we don't evaluate risks solely through rational lenses.

Emotions serve as the underpinning mechanisms that give rise to seemingly peculiar phenomena, such as calendar anomalies. However, today's academic community is delving into the serious examination of these unconventional patterns and their implications for stock trading. This intriguing shift extends to unorthodox practices like tarot card readings gaining traction in Thailand to predict the fate of the cryptocurrency market.

In recent years, it seems that economists and marketers have been on a quest to venture into the realms of human existence where, let's face it, they might seem as out of place as a fish riding a bicycle 😪 After all, it's not like they'll unearth a treasure trove of revelations, for lying is a sin, just as dear old mom warned us since our diaper days.

Economists cannot discover anything new in this regard, and it's unclear where the problem lies. However, problems can also exist on a practical level, as no matter how much a person is taught not to lie, according to statistics, they lie several times a day, in some way, in some manner, even if it's trivial.

Deception thrives in a world of facts, omissions, and selective truths. It's a nuanced realm where truth and deceit dance in shades of gray, often coexisting.

The desire to gain greater profit by deceiving one's neighbour is a very unseemly matter. In reality, these issues have significant importance for daily life as a whole and are deserving of great interest from the perspective of knowledge theory, information exchange, ethics, participant interests, as well as in understanding the society in which we live, how these issues differ from one country to another, from one era to another, and what we should do to ensure that societal interests are observed to the fullest extent possible in the end.

In the past decade, it has become clear that ethical categories such as lies and deceit are entirely relevant in a scientific context, particularly of interest in behavioral economics and social psychology - field that studies the phenomenon of deception lies at the intersection of individual psychology and decision-making psychology.

Deception, it's a word that conjures images of elaborate schemes, half-truths, and cunning stratagems. But the world of deceit is far from black and white - it's a complex tapestry of manipulations and omissions. Why do people resort to deception, and when does it transform from a strategy into pure trickery?

The deceiver knows that the message may not fully align with the truth, at least not in the eyes of the recipient. Yet, the recipient must also recognize the significance of the message and act on it, often serving the deceiver's interests

Lets makes some examples.

Take, for instance, financial pyramids where early investors, though aware of the pyramid's nature, might not perceive their actions as deceptive. From their standpoint, it's a fair game, as they introduced new funds, used to pay dividends to the initial participants 🤷 This cycle continues until new investors stop coming in, and the pyramid inevitably collapses, curling up like a spool of thread and vanishing below the baseboard. It's not always as clear-cut as telling blatant lies. Instead, it's a meticulous play on facts, omissions, and selective truths.

Or

the traditional notion that banks extended loans using pre-existing savings, leading to prosperity for all, was contradicted by practical experience, which clearly showed that banks, in reality, create credit.

Or

Consider a situation where a consultant in a large consulting firm encounters a client with personnel issues. The consultant may not entirely grasp the situation but must provide advice. Here, deception is at play as the consultant provides a suggestion while not having the complete picture.

In the world of trading, it's not just about lying, it's about the selective presentation of information. Those who understand how the market operates often provide new traders with strategies that may not always be optimal, leading to the benefit of market makers, who add additional sums to the market, profiting from these misinformed traders.

Deception becomes a game of facts, omissions, and selective truths. It's not just about outright lies, it's about shaping narratives to achieve specific outcomes. Deception is a nuanced world where truth and deceit often coexist in shades of grey.

Addressing the issue of asymmetric information between buyers and sellers and acknowledging the bounds of rationality are first steps in the right direction.

And let's not forget the world of social engineering, where socio-psychological techniques manipulate consciousness and behavior to influence decision-making. Renowned psychologist Daniel Kahneman introduced the two-step decision-making model, where individuals engage in two levels of thinking when making choices.

Most social engineering techniques aim to trigger the unconscious stage of decision-making, obstructing rational assessment. Deception, in its nuanced form, plays on our cognitive processes, and understanding its dynamics is essential for navigating a world where truth and deceit often coexist in shades of grey.

Financial organizations often leverage behavioral effects to manipulate client perception and nudge them towards excessive loan amounts or suboptimal financial products. For instance, a bank might advertise an expected product return of no less than X%, only to bury the disclaimer, explaining that this return is based on a past period and is not guaranteed for the future, deep within the 20th page of the contract. This exploits the anchoring effect, creating false expectations and stimulating demand. To protect consumers and eradicate such unethical practices, many countries have established regulatory and supervisory bodies rooted in the knowledge and methodologies of behavioral economics.

Is it easier to deceive a crowd than a single investor?

By and large, the contribution of an individual investor in today's financial markets is minimal. If you're a minnow swimming in a shark-infested ocean and you haven't been devoured yet, it's not necessarily a testament to your skills or strength. It's the sharks' oversight. Until you coordinate with fellow traders of your kind 😉

Now, let's add a marketing twist to this tale. In some cases, short sellers bet against a company's stock, buying and immediately reselling it with the expectation of its future decline. If this decline indeed occurs, they get the opportunity to repurchase the stocks at a lower price and return them to their broker, pocketing the difference. What a deception, right? In 2020, Reddit users decided to take money from these wealthy, greedy fund managers" and began buying shares of a struggling company.

The strategy of this united online crowd proved to be effective: within two months, GameStop's stocks surged by 360%, and the retail chain's market capitalization tripled to $5B. The short sellers who were betting against the stock lost $3B. It's the first such instance in world history where a united group of strangers played the financial market against a major player and emerged victorious in the short term.

Now, let's not overestimate the impact, for influencing giants like Google, Amazon is a different ballgame. However, we can't ignore the fact that a coordinated attack via platforms like Reddit can significantly affect the stock of a specific company. Such an event prompts us to ponder - Will the financial markets continue to operate as they have in the past, or are we moving towards a more thoughtful future, one where the economy of deceit might cease to exist?

The financial world is experiencing a transformation driven by the emotional and ethical considerations of individual investors. Empirical research indicates that individuals, when presented with an opportunity to deceive for personal gain, firstly, are adept at recognizing these opportunities and, secondly, take advantage of them if the benefits are substantial and the losses for the other party are insignificant. Ethical considerations play a secondary role in this scenario, especially when the deception remains unnoticed — which raises an intriguing question about the true assessment and awareness of the "scale of societal catastrophes" caused by such deceptions. Everything is a lie, and we are all accomplices. So, feel free to believe it.