Subba’s Serendipitous moments

June 16, 2009

Why do smart people do stupid things?

This has always been intriguing. I always thought that it was perhaps the smart people do things on the spur of the moment. Courtesy my friend Shekhar Gupta, I understood that intelligence and rationality are different. Once one understand this concept, it is easy to understand why smart people can do stupid things.

Think of the mind as having 3 parts:

Autonomous mind that engages in problematic cognitive shortcuts or “Type-1” processing. The mind jumps to the first available solution automatically and without any conscious control.

Algorithmic mind that engages in Type -2 processing — the slow laborious thinking, often leading to analysis paralysis.

Reflective mind that decides when to make do with the judgments of the autonomous mind and when to call the algorithmic mind.

The reflective mind determines how rational a person is. When and how one’s reflective mind springs into action is determined by a number of behavioral attributes including whether one is dogmatic, flexible, open minded and so so. Most importantly it also depends on whether one has fixed mindset or a growth mindset.

An inflexible mindset or a fixed mindset person has trouble assimilating new information and hence invariably ends up force fitting the problem to the solution that he has in his head. And then even though he is smart, he is lazy to find a better solution.

This article provides a succinct analysis. For a thought provoking analysis I strongly recommend reading Carol Dweck’s book. It is bound to influence any thinker. For a very entertaining yet thought provoking book that can significantly change your perspective, I recommend reading Dan Ariely’s book — Predictably irrational.

Have you known of any smart thinkers doing stupid things?


April 1, 2009

Emotion and speech

A saint asked his disciples, ” Why do people shout at each other when they are angry?”

The disciples thought for a while. One of them said, ‘Because we lose our calm, we shout for that.’

“But, why shout when the other person is just next to you?” asked the saint. “Isn’t it possible to speak to him or her with a soft voice? Why do people shout at a person when they are angry?”

Disciples gave answers but none satisfied the saint.

Finally the saint explained, ‘When two people are angry at each other, their hearts move away a lot. To cover that distance they must shout to be able to hear each other. The more angry they are, the stronger they will have to shout to hear each other through that great distance.’

Then the saint asked, ‘What happens when two people fall in love? They don’t shout at each other but talk softly, why? Because their hearts are very close. The distance between them is very small…’

The saint continued, ‘When they love each other even more, what happens?

They do not speak, only whisper and they get even closer to each other in their love. Finally they even need not whisper, they only look at each other and that’s all. That is how close two people are when they love each other.’

MORAL: When you argue, do not let your hearts get distant, do not say words that distance each other more, else there will come a day when the distance is so great that you will not find the path to return.

February 25, 2009

It’s the perception, stupid!

Most decision making processes pay a disproportionate emphasis on the aspect of analysis after one has made an assessment of the situation.

In fact the more important the decision, the more sophisticated the analytical tools.

That by itself is not wrong. However what is wrong is that spectacular errors in decision making can occur not because the analytical tools are inadequate, but our perception tools are! In fact, I blogged about decision frames borne out of perception here

The recent crisis amply  illustrates why:

  1. Even the highly respected Alan Greenspan admitted that he made a mistake by assuming that self-interest would enable banks to protect their own share holders.
  2. Few people are even aware of the perception biases. Looking at and perceiving the world is an active iterative process of creating meaning. This process is dynamic and often it shapes the subsequent steps in the decision making chain including the choice of analytical tools.
  3. Like perception bias, we also suffer from some form of selection bias. There’s a strong predisposition to see data that confirm our biases and ignore data that contradicts them. We also seem to emphasize recent events than historical events when anticipating the future outcomes.
  4. We also seek refuge in the majority. Just because a majority hold a particular view is no proxy that they have to be right. Often a majority is caused by a social contagion and they tend to avoid facing the “Black Swan” moment. And as the crisis has shown, the majority need not be correct.
  5. We need to understand human motivation for sure. Rewards and penalties are one axis to monitor human behavior, but there’s another equally important axis that has been given less importance. The better we understand how fear and greed are represented at an individual level and how they respond to specific externalities, we would be able to avoid crisis. It more important for Type A personalities than Type B personalities.

So are there any ways to improve perception tools?

  1. First, there has to be humble admission that we have limitations and flaws in the way we think about a given situation.
  2. There has to be a more open and backwardly integrated communication of how we arrived at a particular assessment or how we ‘manufactured’ meaning as we saw the situation. Such a communication helps us to uncover the biases.
  3. Every feedback mechanism should be “de-politicized” so as to uncover inconvenient facts.
  4. I am actively looking for more perception tools, since I have long been convinced that better perception is superior to better analysis.

One of the approaches that I have adopted to improving my own perspective is to “sleep on it” for a while.

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