The Art of Thinking Clearly
Page 29
Domestic violence is two to four times more common in police families than in the general population. Read: Peter H. Neidig, Harold E. Russell, and Albert F. Seng, “Interspousal Aggression in Law Enforcement Families: A Preliminary Investigation,” Police Studies 15, no. 1 (1992): 30–38.
L. D. Lott, “Deadly Secrets: Violence in the Police Family,” FBI Law Enforcement Bulletin 64 (November 1995): 12–16.
The Markowitz example: “I should have computed the historical covariance of the asset classes and drawn an efficient frontier. Instead I visualized my grief if the stock market went way up and I wasn’t in it—or if it went way down and I was completely in it. My intention was to minimize my future regret, so I split my [pension scheme] contributions 50/50 between bonds and equities.” Harry Markowitz, quoted in Jason Zweig, “How the Big Brains Invest at TIAA-CREF,” Money 27, no. 1 (January 1998): 114. See also: Jason Zweig, Your Money and Your Brain (New York: Simon & Schuster, 2007), 4.
The Bobbi Bensman example: Zweig, Your Money and Your Brain, 127.
Domain specificity is connected to the modular structure of the brain. If you are skilled with your hands (like pianists), it does not mean that you will have equally reactive legs (like footballers). Though both brain regions are in the “motor cortex,” they are not in the same place—they are not even next to each other.
The quote from Barry Mazur see: Barry C. Mazur, presentation given at 1865th Stated Meeting titled The Problem of Thinking Too Much, December 11, 2002, http://www.amacad.org/publications/bulletin/spring2003/diaconis.pdf.
FALSE-CONSENSUS EFFECT
Thomas Gilovich, Dale Griffin, and Daniel Kahneman (eds.), Heuristics and Biases: The Psychology of Intuitive Judgment (Cambridge, UK: Cambridge University Press, 2002), 642.
The sandwich board “Eat at Joe’s” example: Lee Ross, David Greene, and Pamela House, “The ‘False Consensus Effect’: An Egocentric Bias in Social Perception and Attribution Processes,” Journal of Personality and Social Psychology 13, no. 3 (May 1977): 279–301.
This effect overlaps with other mental errors. For example, the availability bias can lead into the false consensus effect. Whoever deliberates on a question can easily recall their conclusions (they are available). The person wrongly assumes that these findings will be as readily available to someone else. The self-serving bias also influences the false-consensus effect. Whoever wants to present something in a convincing manner does well to tell themselves that many (maybe even the majority) share their view and that their ideas will not fall on deaf ears. Philosophy deems the false-consensus effect “naive realism”: People are convinced that their positions are well thought out. Whoever fails to share their views will see the light if they reflect and open their minds sufficiently.
The false-consensus effect can be reduced by explaining or showing subjects both sides of the story. Kathleen P. Bauman and Glenn Geher, “We Think You Agree: The Detrimental Impact of the False Consensus Effect on Behavior,” Current Psychology 21, no. 4 (2002): 293–318.
FALSIFICATION OF HISTORY
More information on Gregory Markus: See: Kathryn Schulz, Being Wrong: Adventures in the Margin of Error (New York: Ecco, 2010), 185.
Gregory Markus, “Stability and Change in Political Attitudes: Observe, Recall and Explain,” Political Behavior 8 (1986): 21–44.
Flashbulb memory: Ibid., 17–73.
In 1902, University of Berlin criminology professor Franz von Liszt (nothing to do with the composer Franz Liszt) showed that the best witnesses in court recall at least a fourth of the facts incorrectly. Ibid., 223.
IN-GROUP OUT-GROUP BIAS
“Life in nature involves competition, and groups can certainly compete better than individuals. The hidden dimension is that individuals cannot usually compete against groups. Therefore, once groups exist anywhere, everyone else has to join a group, if only for self-protection.” Roy F. Baumeister, The Cultural Animal: Human Nature, Meaning, and Social Life (Oxford, UK: Oxford University Press, 2005), 377–79.
The classic paper: Henri Tajfel, “Experiments in Intergroup Discrimination,” Scientific American 223 (1970): 96–102.
For agreement surplus in groups, see: Kathryn Schulz, Being Wrong: Adventures in the Margin of Error (New York: Ecco, 2010), 149.
More about “pseudokinship,” see Robert Sapolsky, “Anthropology/Humans Can’t Smell Trouble/“Pseudokinship” and Real War,” SF Gate, March 2, 2003, http://www.sfgate.com/opinion/article/ANTHROPOLOGY-Humans-Can-t-Smell-Trouble–2666430.php.
AMBIGUITY AVERSION
Knightian uncertainty is named after University of Chicago economist Frank Knight (1885–1972), who distinguished risk and uncertainty in his work: Frank H. Knight, Risk, Uncertainty, and Profit (Boston: Houghton Mifflin Company, 1921).
The Ellsberg paradox is actually a little more complicated. A detailed explanation is available on Wikipedia (http://en.wikipedia.org/wiki/Ellsberg_paradox).
Yes, we curse uncertainty. But it has its positive sides. Suppose you live in a dictatorship and want to get past the censors. You can resort to ambiguity.
DEFAULT EFFECT
The car insurance policies: Jonathan Baron, Thinking and Deciding (Cambridge, UK: Cambridge University Press, 2000), 299.
Eric J. Johnson and Daniel Goldstein, “Do Defaults Save Lives?,” Science 302, no. 5649 (November 2003): 1338–39.
Cass Sunstein and Richard Thaler, Nudge: Improving Decisions about Health, Wealth, and Happiness (New Haven, CT: Yale University Press, 2008).
The difficulties of renegotiating contracts: Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011), 304–5.
FEAR OF REGRET
The story with Paul and George: Daniel Kahneman and Amos Tversky, “Intuitive Prediction: Biases and Corrective Procedures,” in Daniel Kahneman, Paul Slovic, and Amos Tversky, Judgment under Uncertainty: Heuristics and Biases (New York: Cambridge University Press, 1982), 414–21.
The passenger who should not have been on the plane that crashed: Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011), 346–48.
For traders’ off-loading, see: Meir Statman and Kenneth L. Fisher, “Hedging Currencies with Hindsight and Regret,” Journal of Investing 14 (2005): 15–19.
Ilana Ritov and Jonathan Baron, “Outcome Knowledge, Regret, and Omission Bias,” Organizational Behavior and Human Decision Processes 64 (1995): 119–27.
Another regret question is the following: On your way to the airport you are caught in a traffic jam. You arrive at the airport thirty minutes after scheduled departure time. What makes you more upset (more regret): (a) your flight left on time, (b) your flight was delayed and it left only five minutes ago. Most people answer with (b). The example is again from Kahneman and Tversky. I shortened it a bit. The original wording in: Daniel Kahneman and Amos Tversky, “The Psychology of Preferences,” Scientific American 246 (1982): 160–73.
An example of fear of regret. “ ‘A Fear of Regret Has Always Been My Inspiration’: Maurizio Cattelan on His Guggenheim Survey,” Blouin ArtInfo, November 2, 2011.
We empathize more with Anne Frank than with a similar girl who was immediately arrested and sent to Auschwitz. Compared to other detentions, Anne Frank’s is an exception. Of course, the availability bias also plays a role. Anne Frank’s story is known worldwide through her diary. Most other detentions are forgotten and therefore not available to us.
SALIENCE EFFECT
Roy F. Baumeister, The Cultural Animal: Human Nature, Meaning, and Social Life (Oxford, UK: Oxford University Press, 2005), 211.
Werner F. M. De Bondt and Richard H. Thaler, “Do Analysts Overreact?,” in Thomas Gilovich, Dale Griffin, and Daniel Kahneman (eds.), Heuristics and Biases: The Psychology of Intuitive Judgment (Cambridge, UK: Cambridge University Press, 2002), 678–85.
Scott Plous, The Psychology of J
udgment and Decision Making (New York: McGraw-Hill, 1993), 125–27. Plous substitutes “salience” with “vividness.” The two are similar.
The salience effect is related to the availability bias. With both effects, information that is more easily accessible enjoys undue explanatory power or leads to above-average motivation.
HOUSE-MONEY EFFECT
Cass Sunstein and Richard Thaler, Nudge: Improving Decisions about Health, Wealth, and Happiness (New Haven, CT: Yale University Press, 2008), 54–55.
Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk (New York: Wiley, 1996), 274–75.
You’ve just received: Carrie M. Heilman, Kent Nakamoto, and Ambar G. Rao, “Pleasant Surprises: Consumer Response to Unexpected In-Store Coupons,” Journal of Marketing Research 39, no. 2 (May 2002): 242–52.
Pamela W. Henderson and Robert A. Peterson, “Mental Accounting and Categorization,” Organizational Behavior and Human Decision Processes 51, no. 1 (February 1992): 92–117.
The government can utilize the house-money effect. As part of President Bush’s 2001 tax reform, each American taxpayer received a credit of $600. People who viewed this as a gift from the government spent more than three times as much as those who saw it as their own money. In this way, tax credits can be used to stimulate the economy.
PROCRASTINATION
Jason Zweig, Your Money and Your Brain (New York: Simon & Schuster, 2007), 253–54.
On the effectiveness of self-imposed deadlines: Dan Ariely and Klaus Wertenbroch, “Procrastination, Deadlines, and Performance: Self-Control by Precommitment,” Psychological Science 13, no. 3 (May 1, 2002): 219–24.
ENVY
Envy is one of the Catholic Church’s seven deadly sins. In the book of Genesis, Cain kills his brother Abel out of envy because God prefers his sacrifice. This is the first murder in the Bible.
One of the floweriest accounts of envy is the fairy tale “Snow White and the Seven Dwarves.” In the story, Snow White’s stepmother envies her beauty. First, she hires an assassin to kill her, but he does not go through with it. Snow White flees into the forest to the seven dwarfs. Outsourcing didn’t work so well, so now the stepmother has to take matters into her own hands. She poisons the beautiful Snow White.
Munger: “The idea of caring that someone is making money faster than you are is one of the deadly sins. Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?” in Charles T. Munger, Poor Charlie’s Almanack, expanded 3rd ed. (Virginia Beach, VA: The Donning Company Publishers, 2006), 138.
Of course, not all envy is spiteful—there are also innocent episodes, such as a grandfather envying his grandchildren’s youth. This is not resentment; the older man would simply like to be young and carefree again.
PERSONIFICATION
Deborah A. Small, George Loewenstein, and Paul Slovic, “Sympathy and Callousness: The Impact of Deliberative Thought on Donations to Identifiable and Statistical Victims,” Organizational Behavior and Human Decision Processes 102, no. 2 (2007): 143–53.
“If I look at the mass, I will never act. If I look at the one, I will.” Mother Teresa in ibid.
ILLUSION OF ATTENTION
Christopher Chabris and Daniel Simons, The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us (New York: Crown, 2010), 41–42.
For using your cell phone while driving, see: Donald D. Redelmeier and Robert J. Tibishirani, “Association between Cellular-Telephone Calls and Motor Vehicle Collisions,” New England Journal of Medicine 336 (1997): 453–58.
See also: David L. Strayer, Frank A. Drews, and Dennis J. Crouch, “Comparing the Cell-Phone Driver and the Drunk Driver,” Human Factors 48 (2006): 381–91.
And, if instead of phoning someone, you chat with whomever is in the passenger seat? Researchers from the University of Utah and others found no negative effects. First, face-to-face conversations are much clearer than phone conversations, that is, your brain must not work so hard to decipher the messages. Second, your passenger understands that if the situation gets dangerous, the chatting will be interrupted. That means you do not feel compelled to continue the conversation. Third, your passenger has an additional pair of eyes and can point out dangers. “See: F. A. Drews, M. Pasupathi, and D. L. Strayer, “Passenger and Cell Phone Conversations in Simulated Driving,” Journal of Experimental Psychology: Applied 14 (2008): 392-400. The paper is nicley summarized in Christopher Chabris and Daniel Simons, The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us (New York: Crown, 2010), 353-354.
STRATEGIC MISREPRESENTATION
Flyvbjerg defines strategic misrepresentation as “lying, with a view to getting projects started.” Bent Flyvbjerg, Megaprojects and Risk: An Anatomy of Ambition (Cambridge, UK: Cambridge University Press, 2003), 16.
L. R. Jones and K. J. Euske, “Strategic Misrepresentation in Budgeting,” Journal of Public Administration Research and Theory 1, no. 4 (October 1991): 437–60.
In online dating, men are more likely to misrepresent personal assets, relationship goals, personal interests, and personal attributes, whereas women are more likely to misrepresent weight: Jeffrey A. Hall et al., “Strategic Misrepresentation in Online Dating,” Journal of Social and Personal Relationships 27, no. 1 (2010): 117–35.
OVERTHINKING
Timothy D. Wilson and Jonathan W. Schooler, “Thinking Too Much: Introspection Can Reduce the Quality of Preferences and Decisions,” Journal of Personality and Social Psychology 60, no. 2 (February 1991): 181–92.
Known to chess players as the Kotov syndrome: A player contemplates too many moves, fails to come to a decision, and, under time pressure, makes a rookie mistake.
PLANNING FALLACY
Roger Buehler, Dale Griffin, and Michael Ross, “Inside the Planning Fallacy: The Causes and Consequences of Optimistic Time Predictions,” in Thomas Gilovich, Dale Griffin, and Daniel Kahneman (eds.), Heuristics and Biases: The Psychology of Intuitive Judgment (Cambridge, UK: Cambridge University Press, 2002), 250–70.
Gary Klein doesn’t spell out the exact speech as mentioned in this chapter. This is how he prescribes it: “A typical premortem begins after the team has been briefed on the plan. The leader starts the exercise by informing everyone that the project has failed spectacularly. Over the next few minutes those in the room independently write down every reason they can think of for the failure—especially the kinds of things they ordinarily wouldn’t mention as potential problems, for fear of being impolitic.” See: Gary Klein, “Performing a Project Premortem,” Harvard Business Review, http://hbr.org/2007/09/performing-a-project-premortem/ar/1. Accessed December 17, 2012.
Samuel Johnson wrote: People who remarry represent “the triumph of hope over experience”—in James Boswell’s Life of Samuel Johnson (London: Printed by Henry Baldwin for Charles Dilly, in the Poultry, 1791). In making plans, we are all serial brides and grooms.
Hofstadter’s Law: “It always takes longer than you expect, even when you take into account Hofstadter’s Law.” Douglas Hofstadter, Gödel, Escher, Bach: An Eternal Golden Braid, 20th anniversary ed. (New York: Basic Books, 1999), 152.
The planning fallacy is related to the overconfidence effect. With the overconfidence effect, we believe our capabilities are greater than they are, whereas the planning fallacy leads us to overestimate our abilities, turnaround times, and budgets. In both cases, we are convinced that the error rate of our predictions (whether in terms of achieving goals or forecasting timelines) is smaller than it actually is. In other words, we know we make mistakes when estimating durations. But we are confident that they will happen only rarely or not at all.
A great example of a premortem is described in: Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011), 264.
The Danish planning expert
Bent Flyvbjerg has researched mega-projects more than anyone else. His conclusion: “The prevalent tendency to underweight distributional information is perhaps the major source of error in forecasting.” Quoted in ibid., 251.
The planning fallacy in the military: “No battle plan survives contact with the enemy.” The saying is attributed to German military strategist Helmuth von Moltke.
See also: Roy F. Baumeister, The Cultural Animal: Human Nature, Meaning, and Social Life (Oxford, UK: Oxford University Press, 2005), 241–44.
Here’s a great way to avoid the planning fallacy even if you don’t have access to a database of similar projects: “You can ask other people to take a fresh look at your ideas and make their own forecast for the project. Not a forecast of how long it would take them to execute the ideas (since they too will likely underestimate their own time and costs), but of how long it will take you (or your contractors, employees, etc.) to do so.” Quoted from Christopher Chabris and Daniel Simons, The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us (New York: Crown, 2010), 127.
DÉFORMATION PROFESSIONELLE
“You’ve got to have models across a wide array of disciplines.” Charles T. Munger, Poor Charlie’s Almanack, expanded 3rd ed. (Virginia Beach, VA: The Donning Company Publishers, 2006), 167.
ZEIGARNIK EFFECT
Roy Baumeister and John Tierney, Willpower: Rediscovering the Greatest Human Strength (New York: Penguin Press, 2011), 80–82.
Whether it was a scarf or something else that was left in the restaurant we do not know. We also do not know if it was Bluma Zeigarnik who went back to the restaurant. To make the chapter more fluid, I assumed these were the case.
ILLUSION OF SKILL
Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011), 204–21.
Warren Buffett: “My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago I wrote: ‘When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.’ Nothing has since changed my point of view on that matter.” Warren Buffett, letter to shareholders of Berkshire Hathaway, 1985.