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1/ The Undoing Project (Michael Lewis)
"What were people’s minds doing that led to the misjudgments that could be exploited for profit by those who ignored experts and relied on data?
"How does a psychologist win a Nobel Prize in economics?" (p. 20)
https://www.amazon.com/Undoing-Project-Friendship-Changed-Minds-ebook/dp/B01GI6S7EK/
"What were people’s minds doing that led to the misjudgments that could be exploited for profit by those who ignored experts and relied on data?
"How does a psychologist win a Nobel Prize in economics?" (p. 20)
https://www.amazon.com/Undoing-Project-Friendship-Changed-Minds-ebook/dp/B01GI6S7EK/
2/ "A big part of a consultant’s job was to feign total certainty about uncertain things.
"In a job interview with McKinsey, they told Morey that he was not certain enough in his opinions. ‘We’re billing clients five hundred grand a year, so you have to be sure.’
"In a job interview with McKinsey, they told Morey that he was not certain enough in his opinions. ‘We’re billing clients five hundred grand a year, so you have to be sure.’
3/ "The firm was forever asking him to exhibit confidence when, in his view, confidence was a sign of fraudulence. They’d asked him to forecast oil for clients, for instance.
"What people said when they “predicted” was phony: pretending to know rather than actually knowing.
"What people said when they “predicted” was phony: pretending to know rather than actually knowing.
4/ "There were many interesting questions to which the only honest answer was, “It’s impossible to know for sure.” “What will the price of oil be in ten years?” was such a question. That didn’t mean you gave up; you just couched the answer in probabilistic terms." (p. 28)
5/ "The mind was bad at seeing things it did not expect (and too eager to see what it expected). “Confirmation bias is insidious because you don’t even realize it is happening.”
"A scout would settle on an opinion about a player and then arrange evidence to support that opinion.
"A scout would settle on an opinion about a player and then arrange evidence to support that opinion.
6/ “The classic thing, and this happens all the time: If you don’t like a prospect, you say he has no position. If you like him, you say he’s multipositional. If you like a player, you compare his body to someone good. If you don’t like him, you compare him to someone who sucks.”
7/ "The mind’s best trick was to create a feeling of certainty about inherently uncertain things. Over and again in the draft, the minds of basketball experts formed crystal-clear pictures which later proved a mirage.
8/ "When Jeremy Lin’s coach finally put him in the game—because everyone else was injured—and allowed him to light up Madison Square Garden, the Knicks were preparing to release Lin. He had already decided that if he was released, he’d simply quit basketball altogether.
9/ "That’s how bad the problem was: a very good NBA player would never have been given a serious chance to play in the NBA simply because the minds of experts had concluded he did not belong. How many other Jeremy Lins were out there?" (p. 42)
10/ ”Every year, it is totally pointless. I’m starting to think psychologists are complete charlatans.” The last one had used Myers-Briggs to try to predict behavior—and then tried to persuade Morey, after the fact, that he had warded off all manner of unseen problems.
11/ "The way he’d gone on reminded Daryl Morey of a joke. “The guy walks around with a banana in his ear. And people are like, ‘Why do you have a banana in your ear?’ He says, ‘To keep the alligators away! There are no alligators! See?’ ” (p. 47)
12/ "Why had so much conventional wisdom been BS, not just in sports, but across society? Why had so many industries been ripe for disruption?
"It was curious that a putatively competitive market for highly paid athletes could be so inefficient in the first place.
"It was curious that a putatively competitive market for highly paid athletes could be so inefficient in the first place.
13/ "It was strange that when people bothered to measure what happened on court, they'd measured the wrong things so happily for so long. It was bizarre that it was even possible for a total outsider to walk in with an entirely new approach to valuing basketball players." (p. 50)
14/ "A light appeared brighter when it emerged from total darkness; the color gray looked green when it was surrounded by violet and yellow if surrounded by blue; if you said to a person, “Don’t step on that banana eel!,” he’d be sure that you had said not “eel” but “peel.”
15/ "The Gestalists showed that there was no obvious relationship between external stimulus and sensation, as the mind intervened in many curious ways.
"How does the brain create meaning? How does it turn the fragments collected by the senses into a coherent picture of reality?
"How does the brain create meaning? How does it turn the fragments collected by the senses into a coherent picture of reality?
16/ "Why does that picture seem to be imposed by the mind upon the world around it, rather than by the world upon the mind? How does a person turn the shards of memory into a coherent life story? Why does a person’s understanding of what he sees change with context?" (p. 71)
17/ "When Danny tested his predictions against outcomes—how candidates had actually performed in officer training—his predictions were worthless.
"Yet, because it was the army and he had a job to do, he kept on making them—and he noted that he still felt confident about them.
"Yet, because it was the army and he had a job to do, he kept on making them—and he noted that he still felt confident about them.
18/ "Even after you prove to people, with a ruler, that the lines are identical, the illusion persists. If perception had the power to overwhelm reality in such a simple case, how much power might it have in a more complicated one?" (p. 78)
More on this: https://twitter.com/ReformedTrader/status/1302343976175902720
More on this: https://twitter.com/ReformedTrader/status/1302343976175902720
19/ On the halo effect: “A halo of general merit is extended to influence the rating for the special ability, or vice versa... even a very capable employer is unable to view an individual's separate qualities and assign a magnitude to each in independence of the others.” (p. 78)
20/ "Psychoanalysts's predictions of what would become of their neurotic patients fared poorly compared to simple algorithms.
"This angered psychoanalysts, who believed their clinical judgments had great value.
"If putative experts could be misled, who would not be?" (p. 80)
"This angered psychoanalysts, who believed their clinical judgments had great value.
"If putative experts could be misled, who would not be?" (p. 80)
21/ "Economists assumed people were “rational” and knew they wanted. Given some array of choices, they could order them logically based on their tastes.
"If they said they preferred coffee to tea, and tea to hot chocolate, they should logically prefer coffee to hot chocolate.
"If they said they preferred coffee to tea, and tea to hot chocolate, they should logically prefer coffee to hot chocolate.
22/ "In academic jargon, they were “transitive.”
"But more than a quarter of students had revealed themselves as irrational from this point of view. They would rather marry Jim than Bill, and Bill than Harry—but then also said that they would rather marry Harry than Jim.
"But more than a quarter of students had revealed themselves as irrational from this point of view. They would rather marry Jim than Bill, and Bill than Harry—but then also said that they would rather marry Harry than Jim.
23/ "May suggested the beginning of an explanation: Because Jim and Bill and Harry each had relative strengths and weaknesses, they were hard to compare. “Comparison of alternatives in which one is superior in every respect makes for a simple but rather trivial theory.” " (p.104)
