Rather than a standard review of Michael Lewis’ The Undoing Project, below is a list of handy takeaways from his latest masterpiece. This one tells the story of the intense working relationship between renowned psychologists Daniel Kahneman & Amos Tversky and their impact on behavioral economics (with all quotes below credited to Lewis).
- Confirmation bias: A condition that happens without us even realizing it, it causes the brain to be bad at seeing the unexpected and too eager to confirm assumptions. It’s described as insidious prejudice and you’ve likely already been guilty of it today.
- Endowment effect: Termed, for example, for the occasions whereby we overvalue an employee just because a competitor made the move to hire that person away. This loss of objectivity leads to throwing money at those you’d otherwise consider to be B-players (if even that).
- Present & hindsight bias: Present bias is “the tendency, when making a decision, to undervalue the future in relation to the present.” Hindsight bias occurs when we conclude outcomes were somehow predictable all along. Danger, Will Robinson.
- Truth seeking: Kahneman is known to instruct his pupils to learn to ask not whether something is true, rather what it might be true of. The goal is to find meaning in everything we’re told in the spirit of making better overall judgments. Pure gold.
- Undoing projects: Similarly, Tversky – Famous Amos to his flock – attracted attention and crowds when “doing a negative style of science.” Put simply, he’d undo the mistakes of others. Although long deceased, surely he’d implore we go and do likewise.
- Regression post-feedback: Ever wonder why your people often perform worse after you’ve praised them yet better post-critique? Often, it’s simply regression to the mean. Statistics allow us to “glimpse deep truths about human life.”
- Perceptual defense: Stuff gets “into the mind without the mind’s full awareness,” but tread carefully here. While humans have proven to be able to perceive patterns subconsciously, Kahneman concludes this leads to very little actual learning.
- Gambler’s fallacy: Flip a coin heads five straight times and you may think the chance of coming up tails the next time increases. It doesn’t. Those odds are always 50:50 and you wonder the untold fortunes that will soon be lost to legal in-game betting. Oh boy.
- Heuristics: You know how we’re not supposed to say “rule of thumb” due to its connection to the sanctioned width of a spousal beating stick? Employ “heuristics” instead and teach yourself to not try and predict the likelihood of uncertain events.
- Representativeness: All the world’s “a casino, and our lives are games of chance.” We make judgments of similarity and the pair’s first exploration of heuristics sounds like the Biggie Smalls’ song: “And if you don’t know, now you know.” You know? (Nope.)
- Faulty memory: An availability heuristic occurs when we construct scenarios based on unrelated memories that “effectively replace probability judgments.” We’re left with a twist on the Santayana axiom: remembering the past actually warps our future. Swell.
- Exit velocity: The funniest nugget from the book comes from Tversky’s rule of getting out of awkward situations: just start walking. It’s said that you’ll be amazed how quickly a creative – and ultimately acceptable – excuse will tumble from your face hole.
- Regret: Pop quiz, hot shot – which Olympic medalists are happier, the ones who win silver or bronze? Counterintuitively, it’s the latter. Win bronze and you’re thrilled to be included, but with silver you obsess over the near miss for gold. Crazy.
- Risk: The emotional response to long odds has quite the effect when it comes to risk. Think of the last time you bought a Mega Millions-type lottery ticket or upped your life or disability insurance. Now file it under Classic Exercise in Irrationality.
In summary, human contact and connection are super-complicated things. Maybe just beeline it to your cube, keep your head down, and look really busy all day. You’re welcome.