The Undoing Project
Michael Lewis
I read this a couple of years ago and was impressed by how their work challenged the ‘homo economicus’ of economics textbooks. I’ve forgotten some of its lessons and am writing this as a refresher. Alongside the psychology it has interesting stuff about Israel, how these two got started in the IDF and their subsequent careers in academia.
Confirmation bias
A scout watching a player tends to form a near-instant impression, around which all other data tends to organise itself. We’re eager to see the things we want to see
Regression to the mean
Pilots who are praised when performing well go on to perform badly, whilst pilots who were berated for performing badly subsequently performed well. Instructors imagined that their words were making the difference, but in reality the pilots were just regressing to the mean.
Framing numbers
If you tell people they have a 90% chance of surviving surgery, they are more likely to take it than if you tell them they have a 10% chance of dying.
Regret
People seek to minimise regret when decision making, not maximise utility.
Memory Distortion
We remember how things begin, forget what happens in the middle and let what happens at the end determine how we viewed the event.
Randomness
A birth order of GGGBBB looks less likely that GBGBGB despite them having the same probability.
Gambler’s Fallacy
People think a coin is more likely to land on heads after it has landed on tails. It is just as likely to land on heads again, the coin doesn’t have an impulse to even itself out.
Grouping
Tel Aviv is similar to New York but New York is not similar to Tel Aviv, this is because New York has many features people can latch onto to attach similarities, but Tel Aviv has far fewer features in people’s minds. We can prefer coffee over tea and tea over chocolate but chocolate over coffee, because we are comparing them on different features.