In November, Kahneman joined Tyler for a live conversation (available in podcast and transcript) about bias, noise and more, including happiness, memory, the replication crisis in psychology, advice to CEOs about improving decision-making, superforecasters, the influence of Freud, working in a second language, the value of intuition, and why he can’t help you win arguments with a spouse. So, yes. Hacker News. So that’s what I’m fascinated by these days. So I’m very lucky. AUDIENCE MEMBER: Many behavioral economists use the notion of rationality in neoclassical economics as a normative benchmark, and you have said that you don’t think that’s necessarily a good normative benchmark. One result from that paper is how much people enjoy spending time with their friends. But whether it has changed anything significant, I doubt it. He’s got no sunk costs with respect to poor ideas that the exiting CEO had and couldn’t let go of. In fact, psychology was considered to have been quite rapid in adopting it. COWEN: But at the margin, how would you modify, given —. I think I would feel free to probe, where does that strong wish come from? In the UK, in particular, there is — I wouldn’t call it an industry, but it’s sponsored by government. I think some of that is actually present now that the state is bigger and more established. KAHNEMAN: I have really never been interested in anything to do with gender, so I have never studied or looked at differences between gender in the kind of research we did. . COWEN: Are there groups of people you feel are less subject to biases? COWEN: Well, sports. Thinking Fast and Slow. It means that people have difficulty controlling their attention, focusing on what they want to focus on, and staying focused. COWEN: Much of your last book is about bias, of course. Some people might argue, “Well, Israelis, they have a tendency to speak directly because they’ve had a lot of crisis situations, where you can’t beat around the bush. And indeed, you don’t have to go as far as he does to find cases in which people act fairly rationally. Books and Edited Volumes Daniel Kahneman. He tweeted today, “If it weren’t for sunk costs and my respect for them, I wouldn’t ever get anything done.” What do you think? Otherwise, there’ve been many experiments, and when people override formulas, by and large, they do worse than if they hadn’t. They’re asked to write on that sticker “cyanide” and to stick it on the juice and then to drink the juice. And what were your other examples? So I don’t know how important or how useful it is. You might be surprised by what occupies Daniel Kahneman’s thoughts. That gives them a very good feeling, to be labeled superforecasters. There was a crisis, and many results were questioned, I think correctly. Now, what we found was 50 percent, 5–0, which, by the way, means that those underwriters were absolutely wasting their time, in the sense of assessing risk. There is such a thing as indignation, as moral disgust. Daniel Kahneman is an Israeli-American psychologist and Nobel laureate. Driverless cars — although they’re ahead of the pace we thought 10 years ago, they may be behind the pace we thought 2 years ago. He's now working on a new book, together with Olivier Sibony and Cass Sunstein, in which he focuses instead on the concept of "noise," and argues that If that’s so much more enjoyable at the margin, why don’t people do more of it? That’s what people expect to see in a well-run firm. It’s very striking, but it’s completely insignificant. Alex Ross on Music, Culture, and Criticism. . By Tyler Cowan for the Mercatus Center. Those kinds of experiences — that you can do things that seemed impossible or unlikely — that is certainly very liberating and encouraging and induces creativity. "If you have different people who are going to reach a decision together, the noise reduction technique is to have every one of them write down their answer before the discussion," he says. KAHNEMAN: It’s not that I have an answer and I’m suppressing it. And 25 years later, I published a theory of attention. Read Daniel Kahneman on Cutting Through the Noise by with a free trial. It’s somewhere around 10 percent. . I’m curious how much you think availability bias, confirmation bias, et cetera, was still affecting my recognition-primed decision-making. When people collect too little information or are swayed by the first thing that comes to mind, you get noise rather than bias. And that’s what we’re talking about here. Then, of course, you can achieve more rational results than you could. COWEN: But being an Israeli . And he was also very funny, and being funny is a major asset in social life. . So on that ground alone, it would be questionable as the principle for a normative model. KAHNEMAN: In the sense that this is a norm, and there are things that we’re trained or socialized to find disgusting, to find repugnant. KAHNEMAN: It’s an empirical matter. COWEN: The second question was Martin Seligman, his work on happiness, that there are several dimensions of happiness. Is that their bias? The other collaborator is a brilliant Frenchman that you haven’t heard of. What you’re left with are your memories. And has it influenced you at all? Whereas noise, you can be overconfident more easily, and we all know overconfidence —. My guess is that there will be completely different frameworks, there will be different ways of thinking. The last 1 percent maybe is very, very difficult. If they can diagnose the situation accurately and do it quickly and act intuitively on that basis, then of course it’s beneficial. In Noise, Daniel Kahneman, Cass R. Sunstein, and Olivier Sibony show how noise contributes significantly to errors in all fields, including medicine, law, economic forecasting, police behavior, food safety, bail, security checks at airports, strategy, and personnel selection. I'm Akash kumar. Misinformation is also readily available. COWEN: But if there’s a bias in individuals and noise, why should we trust our experience about this apparent sense of having two methods? “I really don’t think of bias that much.” These days, noise might be the concept most on Kahneman’s mind. And there is a common answer that you find, when I just talk to people and ask them, or the executives had the same answer. COWEN: Do you think of those in functionalist terms? You would be left with bias, but you would eliminate one source of error, and the question is just price. COWEN: Do you think we’ve learned anything general about common sense by having some artificial intelligence? That’s true for athletes — they respond intuitively. Wednesday 19 December 2018. https://www.conversationswithtyler.com. I’ve never been very interested in individual differences and not in gender either, so I don’t know. Get the latest #cowenconvos delivered straight to your inbox. Expensive cases — we’re not talking of insuring cars. COWEN: Do you think we overinvest or underinvest in memories, overall? Looking back on your collaboration with Amos Tversky, which has been written about widely, of course — there’s the famous Michael Lewis book. It turns out that thinking was relatively easy and perception was difficult. Are you asking me as a parent, say? Of course, it affected the whole zeitgeist; it affected the whole culture. COWEN: But say it were always transparent who would be the winners and who would be the losers from a given decision. It’s amazing — within a decade, psychology has changed. All I do know is that, when we pointed out the results, the bewildering results of the experiment on underwriters, and there was another unit — people who assess the size of claims. Without sense or whims, and without the perceptual apparatus that we have and the ability to cause things by acting on the world, they can’t be exactly like us. The Wharton School, University of Pennsylvania, 08 June, 2016. The other demands effort and is slow and so on. We’re conditioned to have them under some conditions. He feels that he can use his mind and that he can speak his mind, and it’s going to be wonderful for his future. KAHNEMAN: Well, there are certain criteria that you would want to apply before you put a machine to work. Other cultures are disgusted by other things. Some people in Silicon Valley will argue AI is stuck at a kind of local optimum. COWEN: We now have some time for questions. Now, it’s hard to say what there is more of, noise or bias. KAHNEMAN: Then having multiple individuals engaged in it, they share their biases, you’ll get the bias. It is true no longer. Tech entrepreneur Daniel Gross suggested that growing up in Israel was a forcing function for the tech sector. KAHNEMAN: Yeah, it’s the means and it’s some extremes. But in addition, one would want a normative theory that takes into account human nature, which the principle of consistency doesn’t. There’s no averaging, but there is looking at a problem from multiple dimensions and collecting a lot of information. COWEN: And you think even knowing about this doesn’t change that. New BEST FRIENDS SONG Reveals SECRET Hidden Cameras in HOUSE! In the HBR article, Kahneman and colleagues report on the noise measurements for ten decisions in two financial services organisations. In your first try, you lose. You might be surprised by what occupies Daniel Kahneman's thoughts these days. 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