March 16, 2017
Book Short – Blink part III – Undo?
I just finished reading Michael Lewis’s The Undoing Project: A Friendship That Changed Our Minds, and honestly, I wish I could hit Life’s Undo button and reclaim those hours. I love Michael Lewis, and he’s one of those authors where if he writes it, I will read it. But this one wasn’t really worth it for me.
Having said that, I think if you haven’t already read both Malcolm Gladwell’s Blink (review, buy) and Daniel Kahneman’s Thinking, Fast and Slow (review, buy), then it might be worth it. But having read those two books, The Undoing Project had too much overlap and not enough “underlap” (to quote my friend Tom Bartel) – that is, not enough new stuff of substance for me. The book mostly went into the personal relationship between two academic thinkers, Daniel Kahneman and Amos Tversky. It also touched on some of the highlights of their work, which, while coming out of the field of psychology, won them a Nobel prize in Economics for illuminating some of the underlying mechanics of how we make decisions.
The two most interesting pieces of their work to me, which are related in the book, are:
First, that human decision-making is incredibly nuanced and complex, and that at least 25% of the time, the transitive property doesn’t apply. For example, I may prefer coffee to tea, and I may prefer tea to hot chocolate, but that doesn’t necessarily mean I prefer coffee to hot chocolate.
From the book, “When faced with complex multidimensional alternatives, such as job offers, gambles or [political] candidates, it is extremely difficult to utilize properly all the available information.” It wasn’t that people actually preferred A to B and B to C and then turned around and preferred C to A. It was that it was sometimes very hard to understand the differences. Amos didn’t think that the real world was as likely to fool people into contradicting themselves as were the experiments he had designed. And the choice created its own context: Different features might assume greater prominence in the mind when the coffee was being compared to tea (caffeine) than when it was being compared to hot chocolate (sugar). And what was true of drinks might also be true of people, and ideas, and emotions. The idea was interesting: When people make decisions, they are also making judgments about similarity, between some object in the real world and what they ideally want. They make these judgments by, in effect, counting up the features they notice. And as the noticeability of features can be manipulated by the way they are highlighted, the sense of how similar two things are might also be manipulated.”
Second, what Kahneman and Tversky called Prospect Theory, which is basically that humans are more motivated by the fear of loss as opposed to the greed of gain. I’ve written about the “Fear/Greed Continuum” of my former boss from many years ago before. I’m not sure he knew about Kahneman and Tversky’s work when he came up with that construct, and I certainly didn’t know about it when I first blogged about it years ago. Do this experiment – ask someone both of these questions: Would you rather be handed $500 or have a 50% chance of winning $1,000 and a 50% of getting nothing? Then, Would you rather hand me $500 or have a 50% chance of owing me $1,000 and a 50% chance of owing me nothing? Most of the time, the answers are not the same.
For fun, I tried this out on my kids and re-proved Prospect Theory, just in case anyone was worried about it.
Anyway, bottom line on this book – read it if you haven’t ready those other two books, skip it if you have, maybe skim it if you’ve read one of them!