Mental Model: Fight or Flight

by | Oct 21, 2020 | Episodes, Mental Model | 0 comments

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Basic Definition

  • Fight or Flight is a biological response to a threat.  Either your natural instinct is to fight the threat and attack it, or your natural instinct is to run away.

Explanation of the Concept

  • Coined by Walter Bradford Cannon of Harvard Medical School in the early 1900s.
  • Both the fight and flight responses are rooted in humanity’s desire for self-preservation.
  • First, the amygdala is triggered.  This is the part of the brain responsible for perceived fear.  This then sends a signal to the hypothalamus, which stimulates the automatic nervous system
  • Biologically, there are two parts of the automatic nervous system, which controls a body’s unconscious response to stimuli
  • When this response is triggered, multiple things can happen physically: increased heart rate, trembling, increased blood flow to muscles, dilated pupils
  • This can help us because we need to be able to act quickly when threats present themselves.
  • This can also hurt us because we can end up making the wrong decision because of a perceived threat.  Not all threats are real.
  • In addition to the traditional “fight or flight” framework, there is a third option – freeze.  Freeze is when the natural response is to simply not move and neither fight nor flee.

    The Mental Model in an Investing Context


    • Apparent danger looms in the stock market most commonly when a stock or asset we’ve purchased suddenly drops in price, and does so rapidly.  This can be really scary, especially if you’re a new investor and have never experienced those emotions before.
    • Imagine that you hold a particular stock, and then it falls into free-fall.  How does this mental model play out in some of the possible responses?
    • Though the fight/flight/freeze response helps sometimes in situations where there are physical threats (when driving, for example), it can be our weakness in abstract situations or simply situations where there are limited or insignificant threats

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