Unreasonably short one-sentence description of the book: Two brilliant Israeli psychologists form an extraordinary friendship that leads to ground-breaking scholarship on how people make decisions.
Michael Lewis is adept at explaining complex phenomena (baseball sabermetrics, the sub-prime mortgage collapse) in the context of a fascinating story. And while I enjoyed this book, it doesn't have nearly the same page-turner appeal of his other books. Nevertheless, the story of Amos Tversky and Daniel Kahneman needed to be told.
A few snippets and insights below. Note, a great companion read is Kahneman's best-selling Thinking Fast and Slow, which explains in detail many of the theories he and Tversky worked on, and their application to decision-making.
- "No one ever made a decision because of a number. They need a story." (Daniel Kahneman)
- "When they made decisions, people did not seek to maximize utility. They sought to minimize regret."
- After the Arab-Israeli war in 1948, Israel invited Jews from around the world to emigrate to Israel. Over the next five years, 730,000 immigrants, from many different countries and speaking many different languages, arrived in Israel. Many of these immigrants had suffered terrible atrocities in World War II. However: "No one was encouraged to speak about what he'd experienced in war ... Part of the job of being an Israeli Jew was to at least pretend to forget the unforgettable."
- A favorite Kahneman principle: "When someone says something, don't ask yourself if it is true. Ask what it might be true of." In other words, don't try to disprove it; rather, try to understand it.
- Amos Tversky's reply to Nobel laureate (physics) Murray Gell-Mann: "You know, Murray, there is no one in the world who is as smart as you think you are."
- On a related note, Tversky's colleagues at the University of Michigan developed this simple intelligence test: The sooner you figure out that Amos is smarter than you, the smarter you are.
- Tversky taught himself to be an optimist, because when you're a pessimist and bad things happen to you, you experience them twice--once in anticipation and once when it happens.
- Kahneman and Tversky conducted countless experiments to uncover errors in logic and judgment that appear systemic to human nature. These experiments were often done with their university students, but also younger students or even prison inmates.
- Some of the fallacies, misconceptions, biases, heuristics and decision-making errors that the pair researched include: The Law of Small Numbers, The Gambler's Fallacy, Framing Heuristic, Anchoring, Availability Bias and Loss Aversion.
- One of the fascinating examples of how biases can negatively impact decision-making is research on expert analysis. For example, radiologists were able to detail the principles of how to read an x-ray to diagnose cancer. From these principles, the researchers created an algorithm to perform the diagnoses without the input of an actual radiologist. Even though the radiologists had provided the principles, the algorithm was a consistently better predictor of cancer than even the best of the live doctors. This same principle has been demonstrated in other fields as well, including many medical fields. (Think about that the next time a doctor gives her opinion.)
For 2017, I am revisiting 50 books I've enjoyed over the past few years and sharing a few interesting facts and findings I discovered in them.
No comments:
Post a Comment