The Human Risk Podcast

What can financial markets teach us about human behaviour? Why might the size of a CEO’s signature tell us something useful about the company they run? And why, even when smart investors know something is probably a bubble, might they keep investing anyway?

Episode Summary
My guest on this episode is Professor Alex Edmans, who returns to the show to discuss his new book, The Madness of Markets: Why Smart Investors Make Crazy Decisions and How to Exploit Them. As the title suggests, this is a book about financial markets. But our conversation is really about something much broader: human behaviour.

Markets ought to be places where irrationality gets eliminated. They contain millions of participants, huge amounts of data and some of the smartest and best-paid people in the world. Yet people still overreact, follow the herd, become overconfident, refuse to admit mistakes and pay attention to things that shouldn't matter.

Alex explains why that happens and what it can teach us about decision-making beyond investing.We explore why seemingly trivial information can move markets, the fine line between conviction and delusion, and why information that's hiding in plain sight can sometimes tell us more than sophisticated financial analysis. Alex share why corporate jets, unusual locations for shareholder meetings and even the size of a CEO's signature can offer clues about how a company is run.

We also discuss information overload and our preference for things we can measure, why more disclosure isn't necessarily better disclosure, and how organisations can exploit the limits of human attention — including the strategic release of bad news on Friday afternoons.

He also considers the impact of AI; machines can process enormous quantities of quantitative information without some of our human biases, but qualitative judgements about character, culture and trustworthiness may still require people. The future, Alex argues, isn't necessarily human or machine, but human and machine. Along the way, we explore bubbles, loss aversion, sunk costs, incentives in investment banking, financial literacy and regulation.

And, ultimately, we return to a simple idea: markets behave irrationally because they're made up of human beings.

Guest Biography
Alex Edmans is Professor of Finance at London Business School, an author, speaker and expert on behavioural finance, responsible business and corporate governance. Before entering academia, Alex worked in investment banking at Morgan Stanley. His research has been widely published, and he has won numerous awards for teaching. His previous books include Grow the Pie and May Contain Lies, the latter of which was the subject of his previous appearance on the podcast.

Links
Alex Edmans' website: https://alexedmans.com/

Alex Edmans on LinkedIn: https://www.linkedin.com/in/aedmans/

The Madness of Markets: https://www.penguinrandomhouse.com/books/821903/the-madness-of-markets-by-alex-edmans/

Alex's previous appearance on the show — Professor Alex Edmans on Misinformation: https://www.humanriskpodcast.com/professor-alex-edmans-on-misinformation/

AI-Generated Timestamped Summary
[00:00:00] Introduction — what financial markets can teach us about human behaviour

[00:01:45] Why Alex wrote The Madness of Markets and why markets are driven by psychology as well as economics

[00:03:15] Markets as a laboratory for human behaviour — if millions of investors can get things wrong, what does that tell us about small groups making decisions?

[00:04:40] Three types of mistakes: overreaction, underreaction and focusing on the wrong information

[00:06:20] Loss aversion and the sunk cost fallacy — why admitting a previous decision was wrong is so difficult

[00:07:20] Combining memorable anecdotes with large-scale evidence, from Isaac Newton to market bubbles

[00:08:45] Why highly intelligent and sophisticated investors still make systematic mistakes

[00:10:40] Finding signals in unexpected places — why more data isn't necessarily better data

[00:12:20] What corporate jets, remote shareholder meetings, CEO photographs and signature sizes might reveal about leadership[

00:14:00] Information hiding in plain sight and how Alex's collection of unusual academic research became a book

[00:17:00] Why more corporate disclosure isn't necessarily helpful — and our preference for quantitative over qualitative information

[00:19:30] Creativity, silos and finding connections that other people miss

[00:21:00] Football, national mood and the stock market — demonstrating how emotion can affect prices

[00:23:00] Recognising our own humanity and why stress and emotion affect even highly experienced decision-makers

[00:24:00] AI and investing — what machines can do better and where human qualitative judgement still matters

[00:26:30] Why market inefficiencies don't disappear even after researchers reveal them

[00:28:00] Knowing there's a bubble but continuing to invest — why being right in the long term can still get you into trouble in the short term

[00:30:00] Investment horizons, other people's money and why your objectives determine what counts as a sensible decision

[00:31:40] Information overload — why watching markets too closely can make investors worse at investing

[00:33:15] How these principles extend beyond financial markets to housing, collectibles and other major decisions

[00:35:20] Mergers and acquisitions, investment bankers and the problem of misaligned incentives

[00:37:00] How organisations exploit human attention — including why bad news tends to arrive on Friday afternoons

[00:39:00] Could changing when and how we work help us notice information that everyone else misses?

[00:41:00] How writing the book changed Alex's own investment decisions, from rebalancing tech holdings to paying attention to fees

[00:43:00] Why Alex hasn't set up his own investment fund and how he applies behavioural insights to his portfolio

[00:46:00] Taking the broader view — why Alex prefers researching, teaching and explaining markets to running money

[00:48:00] Why The Madness of Markets was really 22 years in the making

[00:50:00] Democratising investing, financial literacy and helping people understand the risks they're taking

[00:53:30] Regulation, hidden costs and why making the right information salient may be more useful than simply providing more information

[00:55:45] Are markets really crazy — or are they simply an unusually visible example of humans being human?

[00:58:00] Why the lessons of the book ultimately go far beyond investing

What if understanding regulation could help us spot when politicians are promising the impossible? Regulation sounds simple in theory. Something poses a risk, so we create rules and a regulator to control it. In practice, things get complicated very quickly. It's something we all benefit from, but equally can experience as redtape that prevents us from doing what we think we ought to be able to.

On this episode, I'm exploring the inner workings of regulation; so whether you are a regulator, a compliance officer, work in a regulated industry or just a member of the public, this'll help you understand what is and isn't possible and why regulation can often seem ineffective or overbearing.

Episode summary
My guests on this episode are Lyndon Nelson and Gavin Stewart, two highly experienced former financial regulators and authors of Building Better Regulators: The Art of the Impossible.

Regulators are expected to protect consumers, maintain stability, encourage competition, support innovation and increasingly promote economic growth. The problem is that those objectives don't always point in the same direction. As Lyndon and Gavin explain, making trade-offs is part of regulation; pretending those trade-offs don't exist is where things become problematic.

In our conversation, we explore the tension between rules and principles, why firms don't always respond to regulation in the way regulators expect, and how enforcement involves choices about which cases not to pursue. We also look at regulatory perimeters, the hidden costs of collecting data, and why having more information doesn't necessarily lead to better regulation.

We also discuss AI and crypto, behavioural science, consumer protection, international regulation, the temptation to fight the last war, and why regulators need imagination as well as analysis. Ultimately, this is a conversation about regulation as a human system — shaped by incentives, politics, judgement, uncertainty and the behaviour of both regulators and the regulated.

Guest bios
Lyndon Nelson spent 33 years at the Bank of England, much of it working in regulation, and ultimately became Deputy CEO of the Prudential Regulation Authority (PRA). Since leaving the Bank, he has worked with organisations including London Business School and the International Monetary Fund.

Gavin Stewart began his career as a banking supervisor at the Bank of England before moving to the Financial Services Authority (FSA), where he held a variety of senior roles. He later became Chief Risk Officer at the Financial Conduct Authority (FCA) and subsequently worked in the private sector.Together, they are the authors of Building Better Regulators: The Art of the Impossible, a book designed to help regulators — and those who interact with them — better understand the practical realities of regulation.

Links
Building Better Regulators: The Art of the Impossible — book website
The Enforcement Game — try the exercise discussed in the episode
Lyndon Nelson on LinkedIn
Gavin Stewart on LinkedIn

AI-Generated Timestamped Summary
00:00 Why regulation matters — and the trade-offs politicians often prefer not to acknowledge

03:00 Meet Lyndon Nelson and Gavin Stewart

05:00 Why they wrote the book — and why regulation is so badly understood

07:00 The impossible mandates politicians give regulators

10:00 Primary objectives, secondary objectives and the problem of “have regards”

14:00 Why understanding regulatory failure doesn’t mean letting regulators off the hook

18:00 Regulation as a fundamentally human and behavioural endeavour

21:00 How firms respond to, interpret and game regulation

22:00 Rules vs principles — the impossible search for certainty and flexibility

28:00 Enforcement: what happens when regulators have more cases than resources

31:00 Choosing whom to enforce against — severity, coverage and the “splash test”

34:00 Who are rules really written for — the compliant, the gamers or the criminals?

38:00 The regulatory perimeter — and why technology makes boundaries increasingly difficult

44:00 BCCI, Barings, Wirecard and FTX: the challenge of regulating across borders

48:00 Why more regulatory data doesn’t necessarily produce better regulation

59:00 The “Maginot Line” problem: regulating to prevent the last crisis rather than the next one
 
01:01:00 Failure of imagination, stress testing and learning to think the unthinkable
 
01:04:00 Accountability regimes, senior managers and regulation as an ongoing experiment

01:09:00 The industry that interprets regulation — and the strange business of regulatory “Kremlinology”
 
01:13:00 Who should work for regulators — career regulators, industry secondees and the value of both

01:17:00 Should regulators be better at following the standards they impose on others?

01:19:00 What “risk-based regulation” actually means — and why regulators struggle to admit they have a risk appetite
 
01:22:00 Why better public debate about regulation matters — and final thoughts on the book.

What if AI could help us understand people better, rather than simply replacing what humans do?

Episode summary
How can we use AI to become better at persuasion, communication and understanding human behaviour? My guest on this episode is Roger Dooley, author of The Persuasion Engine, a new book exploring what happens when behavioural science meets rapidly evolving technology.

Roger argues that tools once available only to large organisations — from behavioural science expertise to eye-tracking — are becoming accessible to almost anyone. We explore how AI can act as a personal “nudge unit”, helping us apply ideas from behavioural science, test communications and understand how different audiences might respond.We also discuss why simply asking an AI for an answer isn't enough, how to push LLMs beyond predictable responses, and why human judgement remains essential.

Roger introduces his idea of a “60-second audit” — using AI to identify how communications might be misunderstood or backfire before we send them.Along the way, we talk about Cialdini, cognitive biases, invisible calls-to-action, board papers, cultural disasters, AI collaborators, rally driving, long division and why the best analogy for AI might be a power tool rather than a replacement for human thinking.

Guest bio
Roger Dooley is an author, speaker and behavioural science expert who has spent years exploring a deceptively simple question: why do people do what they do?

His latest book, The Persuasion Engine (Wiley, 2026), looks at what happens when behavioural science meets AI — and how tools once available only to big companies with big budgets are now becoming accessible to almost anyone.Roger is also the author of Friction, named a Top 3 Management Book by PwC’s strategy+business, and Brainfluence, which has been published in 11 languages.

He brings an unusually practical perspective to the subject. Roger co-founded College Confidential  and today he combines that entrepreneurial experience with behavioural science in his writing, speaking and teaching.He is a lecturer at McCombs Business School, a Forbes contributor and host of the Brainfluence podcast — and his work focuses on helping organisations understand people better, remove unnecessary friction and communicate in ways that actually work.

AI-Generated Timestamped Summary
00:00 — What if AI could be your behavioural scientist?
05:00 — Cialdini, behavioural science and why people don’t know why they decide
10:00 — Eye-tracking, attention and what people actually notice
15:00 — Making important information more visible
20:00 — Board reports, visual hierarchy and designing for human attention
25:00 — Better prompting and getting AI beyond obvious answers
30:00 — What happens to human expertise when AI knows the theory?
35:00 — Reactance, unintended consequences and communications that backfire
40:00 — Cultural context, reputation and Roger’s “60-second audit”
45:00 — Using AI to become better at understanding other audiences
50:00 — Roger’s lifelong interest in technology and what comes next
55:00 — Cognitive offloading, critical judgement and rally driving
57:00 — Why AI is best thought of as a power tool

Links to topics discussed
The Persuasion Engine — Roger’s latest book on how AI, behavioural science and neuromarketing tools are becoming accessible to organisations of all sizes.
Roger's previous appearance on this podcast talking about Friction.
RogerDooley.com — Roger’s website, including his books, articles, speaking and latest work.
Roger on LinkedIn — where Roger regularly shares ideas on behavioural science, persuasion, AI and marketing.
The Brainfluence Podcast — Roger’s podcast exploring behaviour, persuasion, neuroscience and business.
Roger’s episode on The Persuasion Engine — his own introduction to the ideas behind the book, including what he calls “Neuromarketing 2.0”.
Friction — Roger’s previous book, and the subject of his earlier appearance on The Human Risk Podcast.

What’s the last thing you learned simply because you wanted to know?

Episode summary
Why do we feel the need to justify what we learn? My guest on this episode is Annie Wagstaff, a musician and composer whose career has taken her around the world touring with Take That and into writing music for advertising. But alongside her work in music, Annie has developed another passion: learning about whatever happens to make her curious.That could be vine tomatoes, animals, colour, knots, the human body, or simply something she notices while walking through a supermarket.

Annie shares what she discovers on social media, not because the knowledge necessarily has an obvious purpose, but because she finds it interesting. And that raises a fascinating question: what happens to the natural curiosity we have as children as we become adults?In our conversation, we explore creativity and constraints, sonic branding, why children pick up stones while adults tell them to put them down, the pleasure of knowing a little about a lot, short attention spans and hyperfocus, authenticity in an age of AI, and why learning something without knowing what you’re going to do with it might be exactly the point.We also talk about Take That, vine tomatoes, staring at flowers, doomscrolling, notebooks, knots and sailing — the kind of eclectic mix that an episode about curiosity really ought to contain.

Guest bio
Annie Wagstaff is a London-based guitarist, musician and composer.She has worked as a session musician, toured internationally with Take That, and composes music for advertising and other commercial projects.

Earlier in her career, Annie also released her own music and built a large following online through her guitar playing.More recently, she has used her social channels to share the things she learns simply because they interest her — turning subjects ranging from science and animals to everyday observations into short, accessible explorations of curiosity.

AI-Generated Timestamped Summary
00:00 — Why curiosity matters
05:00 — Touring the world with Take That
10:00 — Writing music for advertising
15:00 — Sonic branding and the power of sound
17:00 — From “Guitar Girl” to curiosity creator
22:00 — Vine tomatoes and unexpected rabbit holes
25:00 — Why children are naturally curious
34:00 — Flowers, distraction and noticing the world
38:00 — Becoming a “knowledge butterfly”
45:00 — Authenticity, social media and AI
50:00 — Why does knowledge need a purpose?
55:00 — Rediscovering curiosity — from five minutes to sailing

Links
Annie's Website: anniewagstaff.com including her books
TikTok: @annieplaysguitar on TikTok
LinkedIn: Annie Wagstaff on LinkedIn
Instagram: @annieplaysguitar on Instagram
YouTube: Annie Plays Guitar on YouTube

What happens when someone who spends his life thinking about risk, decision-making and human behaviour is confronted with an uncertainty he simply can’t control?

Episode summary
My guest is Paul Craven, a behavioural scientist, former investment professional, magician and keynote speaker, and one of my favourite people to talk to. When we sat down to record this episode, I noticed that Paul’s voice sounded different.

His explanation — that he had recently been diagnosed with oral cancer — took our conversation in an unexpected and deeply personal direction.We explore what his experience has taught him about uncertainty, why he deliberately chose not to Google his diagnosis, and the difference between having information and having useful information.

From there, we explore luck and skill, decision and gratitude journals, relationships versus transactions, the dangers of binary thinking, and why sometimes the best thing you can do when you’re in a bad mood is go for a walk in the rain. It’s a conversation about behavioural science, but also about perspective, paying attention and what we discover about ourselves when life doesn’t go according to plan.

Key themes
Living with uncertainty and the psychological value of having a plan
Why more information isn’t always better information
AI, search engines and our desire for certainty
Nuance versus binary thinking
Luck, skill and decision journals
Gratitude and paying attention to what matters
Relationships versus transactions
Storytelling, lived experience and different ways of seeing the world
Chameleon Thinking and the value of changing perspective
Guest Profile - Paul Craven
Paul is a behavioural scientist, keynote speaker and former investment professional who brings together insights from psychology, behavioural science, finance and magic to explore how people really think and make decisions.

Links
Paul Craven — speaker profile and booking enquiries
Paul Craven’s website
Iain McGilchrist
Martin Shaw
Mark Vernon
Paul’s previous appearances on the Human Risk Podcast
Solo: Paul Craven on Magic, Money & The Mind

With Gerald Ashley: Gerald Ashley & Paul Craven on Statistics, Spreadsheets & Scam Artistsand Paul Craven & Gerald Ashley on Context, Consequences & Changeability

With Rory Sutherland: Rory Sutherland & Paul Craven on Alchemy & Magic and Paul Craven & Rory Sutherland on Magic & Alchemy

With Rory Sutherland & Gerald Ashley at Abbey Road

Timestamped summary
00:00 — Introduction

01:35 — Paul’s diagnosis and living with uncertainty
Paul reveals his cancer diagnosis and reflects on why not knowing can sometimes be harder than receiving difficult news.

07:00 — Medicine, empathy and different perspectives
What Paul’s experience of the NHS taught him about communication, multidisciplinary thinking and the importance of context.

10:00 — Appreciating life, stories and walking in the rain
From Iain McGilchrist and Martin Shaw to Rowan Williams’ wonderfully simple advice for dealing with a bad mood.

17:10 — Reframing, Chameleon Thinking and “All shall be well”
Why changing perspective can help us navigate difficult circumstances — including Paul’s own illness.

25:45 — Why Paul chose not to Google his cancer
The risks of searching without context, what AI adds to the problem, and why life rarely provides simple binary answers.

31:20 — Luck, skill and keeping journals
What investment management can teach us about hindsight, decision quality and the value of both decision and gratitude journals.

37:20 — Relationships, transactions and the limits of efficiency
Why trust and relationships matter, and what can be lost when we optimise purely for efficiency.

43:25 — Authenticity, AI and Chesterton’s Fence
The value of individuality in an AI-mediated world and why we should understand what we’re discarding before we replace it.

47:10 — Wisdom under every rock
Paul brings together the themes of reframing, curiosity and learning from different perspectives.

49:10 — An update on Paul
Christian shares encouraging news following Paul’s surgery and looks forward to welcoming him back to the show.