Continuing week 5 - part of the 60 day information management refresher course from the CORTEX.
Week 5, Day 4
Theme: Analytic Errors
Week 5, Thursday
This week's theme is mistakes. Today we look into how people make decisions and you have a choice.
WATCH Choice 1: Think Twice: Michael Mauboussin at CEP 2011 Streamed
30 minutes
"Think Twice:" Michael Mauboussin at CEP's 2011 Conference, YouTube video of Michael Mauboussin talking at the Center for Effective Philanthropy's 2011 conference.
READ Choice 2: Think Twice A cautionary tale for investors 70 KB
5 minutes
'Michael Mauboussin's 'Think Twice': A cautionary tale for investors' article by Vishesh Kumar, on the AOL DailyFinance site, August 2009. Available on AOL here.
READ Choice 3: Think Twice: Harnessing the Power of Counterintuition To buy
??? hours. How fast can you read 204 pages?
'Think Twice: Harnessing the Power of Counterintuition' by Michael Mauboussin Chief Investment Strategist at Legg Mason Capital Management and adjunct professor of finance at Columbia Business School, hardcover book published by Harvard Business School Press, October, 2009, 204 pages. Available to purchase on Amazon.
Key takeout: Fascinating insight into how we make decisions - especially insightful on the subject of mistakes and experts. Choice 1, the video, is a great way to be introduced to Mauboussin's ideas. Choice 2 is the one to take if you really can't spend half an hour watching choice 1. Choice 3 is something to keep in mind. Now go out and read the book!
As always, comments, questions and ideas are all welcome.
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There's been a lot of interesting AI / Robotics work shoiwng how the interaction of actually quite primitive directives can have the appearance of intelligence (we tend to anthropomorphize and see intelligence rather than just the interplay of basic imperatives, programmed or instinctual). The human abilities to generalize from specifics, discriminate specifics from the general case, and organize information structurally, are perhaps our most defining capabilities. These abilities allow us to deal with a complex world. If we don't rely on simplifications and generalizations, we'd never act at all (information overload). However, acting on these generalizations, it is important to remember the distinction between correlation and causation! One can give examples where human assumption of cause and effect lead to the wrong answer. But there are so many more where the human assumption works well. One does not have to understand how ants work to learn that if you leave a piece of bred with jelly on it in the grass, soon ants will find it and form a food line. It is tempting to believe the world is too complicated for humans, but I personally reject that notion at the right level of abstraction, things are simpler. Predicting a single human behavior is harder than predicting how a group of humans will behave (the science behind statistical sampling / polling). I'm not exactly disagreeing with the sentiments of the comment thread, but I'll leave you with this thought. At some level, the relationships between two people are complicated. The sum of many individual actions, reactions, interactions. Too complicated to compute. Too complicated to explain. And you can't possibly know what either of them is truly thinking what is inside their brain. The ultimate black box. But, my human mind has a very simple way of simplifying this that cannot be argued with. I love my family. There are people in my life I label, without reservation, friend . Maybe the world isn't as complicated as we'd like to believe when it comes to the important stuff- it just looks that way when you get into the weeds.
Posted by: Natalie | Saturday, May 05, 2012 at 08:53 PM