The Giant Pool Of Money Analysis Essay

970 Words Oct 10th, 2015 4 Pages
The Giant Pool of Money Analysis

Every individual in the United States wishes to be a homeowner because owning a home is considered as the ultimate achievement by majority of the population and is a symbol of successful and fulfilling life (Grant, Rick). So in the early 2000s when individuals were provided an extremely easy way of getting a loan and buying a home irrespective of their job and background, majority of them grabbed the opportunity. But, this scheme of simplifying mortgage rules and procedures led to overvaluation of mortgages based on an assumption that housing prices will continue to escalate led to the financial crisis of 2008 (Blumberg and Davidson). One of the biggest issue during crisis was that the decisions made around the mortgage rules included a lot of biases. These biases influence the natural flow of things and force the people involved to ignore certain pieces of information that could help them in making more efficient and better decisions.

I believe there were two biases that had the most significant impact on the mortgage crisis. One that was most clearly visible in The Giant Pool of Money podcast is the confirmation trap. Bazerman and Moore explain confirmation trap as, “When we encounter information that is consistent with our beliefs, we usually accept it with an open mind and a glad heart instead of questioning the validity of it.”. It means that when we have a certain stand about something, we just accept it as true and ignore any facts…

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