A curious study [PDF], published in Psychological Science, is a good prequel to our soon-to-come posts about Behavioral Economics.

This study shows that sports contenders who have red uniforms tend to attain better results than other colors, and that this is due to an innate bias in referees. The same Taekwondo fights were shown to several referees, with only the color of the uniforms modified, and they tended to score the red uniforms higher each time (they were later shown the same fights with the colors reversed and the red ones would still receive a higher score).

We wonder how long it will take for marketing execs to catch onto this trend and for many more products to start having red labels and logos. And how many speculators will assume people have a “red bias” and look for companies to invest in that have nothing Red about them so they can catch the undervalued companies? And how long will it take this action to counteract the bias until markets reach equilibrium again?

Or markets could save themselves the trouble and not jump on this bandwagon in the first place. I guess we’ll see.