Ben Hunt takes us on a very interesting game-theory trip. Longer piece but important.

Ben prefaced this piece with the following note:

"Today's note, Adaptive Investing: What's Your Market DNA?', begins 2014 with a new series of notes that I hope will stitch together many of the various Epsilon Theory threads I've been writing about over the past six months. It's a lengthy note (even for me) as there's a lot of introductory ground that has to be covered, but here's the basic premise: the human animal is hard-wired to participate in markets not only as a self-interested individual but also, whether we realize it or not, as a group-sensitive member of a distinct tribe speaking a distinct language with a distinct grammar. This perspective is totally alien to modern economic theory, and it opens up both the concepts and the toolboxes of evolutionary biology and linguistics, which is where I think you find the best game theory and information theory research of the past 20 years. I believe that much of what we find puzzling about markets today can be explained by seeing markets through this lens, and the potential is there to develop a useful new way of understanding risk and reward in portfolio construction ... Adaptive Investing."