If something bad happens in the stock market:

  • if no one panics, everyone loses only 10%.
  • if some people panic, everyone loses 25%, except for those that panicked, who don't lose anything.

If 100 people are in a room that's on fire and there's only one exit:

  • if no one panics, 75 people get out safely.
  • if some people panic and fight for the exit, only 50 people get out safely, but that includes all those that panicked.

The numbers are contrived, but the underlying principles apply.

If any individual refuses to panic it will make little difference, as others will panic anyway.

It seems that panicking early is a good philosophy for personal protection in many situations.

Is there a non-altruistic reason that one shouldn't panic?

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    From the utilitarian perspective, whether it is good depends on those numbers you contrived to make it so. But I think the more common situation is that everybody loses, including those who panicked, compared to nobody panicking. That would be the situation of the prisoner's dilemma, where individually rational decisions lead to an inferior outcome for all. Some give it as a utilitarian justification of moral codes: to suppress individual rationality in favor of collective one. – Conifold Mar 18 at 1:02
  • The moral dilemma is interesting, but the question title poorly worded. – armand Mar 18 at 3:31
  • @armand, feel free to improve the title. – Ray Butterworth Mar 18 at 3:59
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    @Conifold says "the more common situation is that everybody loses". This question was inspired by my own actions. In January I noticed that my investment funds had gone up between 15 and 20% in not much more than a year, realized that it can't be sustained, and decided it would be good to sell them soon. Near the end of February, when the COVID-19 thing started to look serious, I sold them all. I have their full value, in cash, earning interest. I.e. I won. Had I not panicked, the funds would have lost 25% of their value, and I'd be stuck wondering whether to sell now or hope it's over. – Ray Butterworth Mar 18 at 4:07
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    This doesn't strike me as panic, sounds more like a considered decision. And a reasonable one. Panic is more like "oh my God, everything is going to hell, I have to sell now, right now!" But considering the predictable impact of the virus on the markets even massive sell off isn't panicky. – Conifold Mar 18 at 5:22

Panic is an impulsive (instinctive or reflexive) impulse. People who panic act using the same fight/flight mechanism that animals do, and are subject to the same laws of selection that apply to animals. People who happen to panic in the right direction at the right time survive; people whose instinctual responses are somewhat less adaptive might run in the wrong direction, or get trampled by others, or freeze in fear. They do not survive. It's easy after the fact to say that following a panic instinct is good, because only those who survive are left to talk about it. The ones who followed their panic instinct in the wrong direction would probably disagree, if they were still around to disagree.

Assessing a situation dispassionately always improves one's odds. That way one can choose between various options rather than blindly rush at the most salient. As anyone who thinks about the stock market knows, panicked crashes produce great opportunities for those who are willing to be calm and wait; they take the temporary losses, buy up the panicked sell offs cheaply, and reap the rewards later. Moreover, when people remain dispassionate they have the capacity to be altruistic: to direct panicked others to better outcomes; to protect weaker people from the rampaging herd. Homo sapiens adapted to be a creature that relies more in on its cognitive abilities than its instinctual reflexes; it's generally wiser to play to our strengths as a species.

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  • +1 I'm sitting out the Dow's and the FTSE's current nose-dives. – Geoffrey Thomas Mar 18 at 16:42

Slime moulds are a member of the proteia, true single-celled organisms, yet they are capable of collaborating in various ways. In particular, when they face an existential threat (ie, reason to panic), when their climate dries out, food source ends, they can collaborate and some individuals sacrifice themselves to become stalks, some spores, and they are far more likely to be able to replicate into a new environment. It seems those that become stalks are 'close enough' related, for it to make sense to sacrifice themselves. Analogous to the extra threat we might take on for our family, which we rationalise but ultimately is a result of a genetically stable strategy. By dividing into stalk and spore, the fitness of the group is increased, it has a 'culture' which will allow it to be more resilient. That means the behaviour encodes a kind of system or community intelligence, not one that is purely individual, and selfish.

Humans have deep instincts, both for altruism and empathy, and violence and selfishness. Jonathan Haidt has done good research on how herding cultures develop a feuding honour culture to deter others because nearly their whole wealth is in a stealable herd, vs agrarian ethics where cooperating to sow and harvest wheat rice and field crops is essential, and the focus tends to be on personal integrity. Haidt also shows people who grow up near border conflicts, and during turbulent times, tend to be more right wing, and less tolerant of ambiguities. When we go beyond only looking after our family, our community is more resilient & succesful, beyond our community our nation is. Peter Singer describes this as 'the expanding circle of moral concern'.

So we begin like that, with expanded family/kin concern. But by the time we get to industrialisation, we get all kinds of systems intelligence, that goes beyond 'you are like me' that it is mutually beneficial to share. The UK's Health & Safety Executive was created in response to events like theatre fires, as spotlights used flammable gases, and everything was made of wood. So you got a safety curtain, you got fire exits. And falsely yelling 'Fire!' in a theatre, which happened and caused deaths, is considered one of the deep limits of free speech, so a cultural reaction against anyone who would do that.

How intelligent a culture is going to be in a crisis, can be very difficult to evaluate until one happens. But that's what it comes down to. What mix, what ratio of decisions, will typical groups make, & how fitted will it be? Some panic early, some hold back and evaluate, etc. We draw on stories, experiences (eg fire drills; team activities), sense of national and local identity, peer pressure & how we think others will view us then & after, and animal instincts - all in competition. We try to have heuristics about when we should panic and when we shouldn't - the Grenfell Tower fire might shift people's balance, say. The result, is the intelligence of the system.

The 1929 Wall Street Crash shows a breakdown in the intelligence if a system. Someone maliciously yelling 'Fire!' in a theatre primed to panic, is a system breaking down. But instincts are primed, malleable, can ve cultivated to support systems with more resilience and intelligence.

Your individual duties, were to prepare beforehand. I find martial arts training the most interesting example of this. By training technique, building fitness and reflex, you will be more ready to act in accordance with your values, to act in a way you won't regret, in a dangerous situation, which invariably involves split-second decisions. There's n9thing like having experienced adrenalin, terror, uncertainty, before in practice situations and learning how your body reacts and how to get calm and make decisions. For me it was agonising over bad decisions, that made me train to be ready to make better ones. A culture that supports training like that, is more ready for panic, as is the person that trains.

With the stockmarket it's harder to see how to make that case. It is a system for working out where investment should go. The 'training' and learning are in the form of regulation, 2008 crash (& 1929) led to many changes. Ultimately when a crisis, or fire, or act of violence hits, we have to make practical instinctive decisions. Our moral commitment is to have cultivated ourselves and our systems, to be ready to live with what happens without regrets, know we could not have done more, or better, or smarter, in that time of panic.

Evolution is thought now to be driven by 'punctuated equilibriums', that is not mainly by genetic drift, but by 'panics', harsh selection pressures (eg asteroid) then new opportunities/empty niches. So we might see developing system intelligence to face panics, as the grindstone of evolution, whether in ecosystems or brains.

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There are both good and bad sides to panic, like any other instinctive response. With panic, we learn fear. We learn humility and it forces us to take stock of the reality of situations as is. For instance, you have to panic if you come face to face with a tiger in a jungle or you run out of water in the middle of the dessert. Panic can also be destructive, in the sense that it can hinder rational response to external events. It can overwhelm our senses and make us do things that we wouldn't do otherwise. The toilet paper frenzy during these times could be an example. It maybe also useful to note that this is the same for other emotions such as guilt, jealousy, anger, fear etc.

To answer your question: Panic enhances short term instinctive actions that are not always thought through. This, maybe vital in the present but obviously leads to bad consequences in the long term, so in a sense, panic based actions can be harmful to the individual and to the society as a whole

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What you are describing is not panic at all. Panic is a state of mind where you are driven purely by instinct and not capable of rational decisions at all, and panic is unlikely to lead to good decisions.

What you are describing is people intentionally and rationally making selfish decisions. That's not panicking.

There are situations where people can improve their own situation at the expense of everyone else. There are many situations where everyone being selfish actually produces a worse outcome for everyone. For the other situations, that's where society usually takes action by creating laws, or creating moral rules. For example by creating traffic rules, fines for letting your dog shit in the kid's playground, etc.

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