"Bees make investment decisions every day, expending much time and effort searching for returns, which in their case is nectar from flowers. The link between investment and bees was explored by ecologist Leslie Real of Indiana University back in 1991 in a study that monitored honey bees' behaviour to better understand attitudes to risk. This study will be unknown to most investors but offers some valuable insights.
During the experiment bees were given their own investment choice to make: Either feed from blue flowers which always contained 2ml of nectar without fail, or gorge on yellow flowers, which were randomly mixed so that one in three contained a triple payoff with 6ml nectar.
Theoretically, the bees were tempted with the same payoff - either drink from blue flowers with 2ml or from every third yellow flower with 6ml nectar. But the blue flowers paid the same reward each and every time while the yellow flowers only gave the nectar sporadically and were therefore more risky - much the same dilemma regularly faced by investors.
The experiment showed that bees initially 'invested' evenly in both colors. But they quickly learned to stick to blue flowers, which always contained 2ml of nectar. In fact, they preferred the reliable blue flowers over the yellow flowers 84 per cent of the time.
For bees the consistency of the gain became more important than the amount of the gain. Bees thus have a strong preference for a reliable supply of nectar over an irregular reward."
Bees teach investors handy lesson
by: Andreas Rosenau
From: National Features
December 25, 2011 11:30PM