Manufacturing guy-at-large.

Filtering by Tag: kahneman

Intellectual influence

Added on by Spencer Wright.

From a 2011 review of Daniel Kahneman's Thinking, Fast and Slow - which, as I've written before, is very good:

But intellectual influence is tricky to define. Is it a matter of citations? Awards? Prestigious professorships? Book sales? A seat at Charlie Rose's table? West suggests something else, something more compelling: "Kahneman's career shows that intellectual influence is the ability to dissolve disciplinary boundaries."

That's a pretty compelling definition to me.

The tyranny of the remembering self

Added on by Spencer Wright.

From Thinking, Fast and Slow:

Confusing experience with the memory of it is a compelling cognitive illusion - and it is the substitution that makes us believe a past experience can be ruined. The experiencing self does not have a voice. The remembering self is sometimes wrong, but it is the one that keeps score and governs what we learn from living, and it is the one that makes decisions. What we learn from the past is to maximize the qualities of our future memories, not necessarily of our future experience. This is the tyranny of the remembering self.

This shit is crazy. What would you prefer? To enjoy a thing, or to remember enjoying it? 

Kahneman's work suggests that these two things are in many ways opposed. If you prefer to remember enjoying an experience, you should consider two factors: 

  • Peak-end rule: The global retrospective rating was well predicted by the average of the level of pain reported at the worst moment of the experience and at its end.
  • Duration Neglect: The duration of the procedure had no effect whatsoever on the ratings of total pain.

...All of which is totally different from how we think we experience life. In designing experiences themselves, we tend to maximize duration and neglect both the peaks and the ends.

I would like to think that I would be self aware enough to overcome these tendencies, but in truth I think all I can do is try to design the things I offer into the world such that they maximize my audience's memory of me.

"Quick, Big Wins."

Added on by Spencer Wright.

According to his LinkedIn page, Piet Morgan began working on Hammerhead in September 2012. Hammerhead went on to raise $190K on Dragon in October of 2013. Immediately afterwards, they entered the R/GA+Techstars accelerator, where they received a $20K stipend + (I'm guessing here - it's a safe bet) an additional $100K convertible note.

Hammerhead matriculated from R/GA in March, and today TomorrowLab announced that they've been hired by Hammerhead to "get to market by September 2014."

They also have Brad Feld and Scott Miller as advisors - two consummate hardware startup experts.

Things take time. Developing products is hard. Sure: money, guidance, and a space to work in help. But product development is still time consuming, and quick, big wins don't come easily.

As a cyclist, I must say that I'm not particularly interested in Hammerhead; it's just not my style. But I saw their pitch in person at a meetup a few months back, and I must say that it was very good. Piet seems really smart, and the team appears to be down-to-earth and rather personable. We've got friends in common, and from everything I know about their team it seems like they're kicking ass.

But launching things is hard, and quick, big wins are elusive. Remember this, and don't trick yourself into thinking you're above it.

Departure from the default

Added on by Spencer Wright.

Daniel Kahneman, in Thinking, Fast and Slow. Emphasis mine:

People expect to have stronger emotional reactions (including regret) to an outcome that is produced by action than to the same outcome when it is produced by inaction. This has been verified in the context of gambling: people expect to be happier to gamble and win than if they refrain from gambling and get the same amount. The asymmetry is at least as strong for losses, and it applies to blame as well as to regret. The key is not the difference between commission and omission but the distinction between default options and actions that deviate from the default. When you deviate from the default, you can easily imagine the norm - and if the default is associated with bad consequences, the discrepancy between the two can be the source of painful emotions. The default option when you own a stock is not to sell it, but the default option when you meet your colleague in the morning is to greet him. Selling a stock and failing to greet your coworker are both departures from the default option and natural candidates for regret or blame.

In a compelling demonstration of the power of default options, participants played a computer simulation of blackjack. Some players were asked "Do you wish to hit?" while others were asked "Do you wish to stand?" Regardless of the question, saying yes was associated with much more regret than saying no if the outcome was bad! The question evidently suggests a default response, which is, "I don't have a strong wish to do it." It is the departure from the default that produces regret.


Added on by Spencer Wright.

More from Daniel Kahneman's Thinking, Fast and Slow. Emphasis mine.

Organizations may be better able to tame optimism and individuals than individuals are. The best idea for doing so was contributed by Gary Klein, my "adversarial collaborator" who generally defends intuitive decision making against claims of bias and is typically hostile to algorithms. He labels his proposal the premortem. The procedure is simple: when the organization has almost come to an important decision but has not formally committed itself, Klein proposes gathering for a brief session a group of individuals who are knowledgeable about the decision. The premise of the session is a short speech: "Imagine that we are a year into the future. We implemented the plan as it now exists. The outcome was a disaster. Please take 5 to 10 minutes to write a brief history of that disaster."

...The premortem has two main advantages: it overcomes the groupthink that affects many teams once a decision appears to have been made, and it unleashes the imagination of knowledgeable individuals in a much-needed direction. 

As a team converges on a decision - and especially when the leader tips her hand - public doubts about the wisdom of the planned move are gradually suppressed and eventually come to be treated as evidence of flawed loyalty to the team and its leaders. The suppression of doubt contributes to overconfidence in a group where only supporters of the decision have a voice. The main virtue of the premortem is that it legitimizes doubts. Furthermore, it encourages even supporters of the decision to search for possible threats that they had not considered earlier. 

This is a brilliant idea. 

Availability Heuristic

Added on by Spencer Wright.

Also (again) from Thinking, Fast and Slow.

A major advance in the understanding of the availability heuristic occurred in the early 1990s, when a group of German psychologists led by Norbert Schwarz raised an intriguing question: How will people's impressions of the frequency of a category be affected by a requirement to list a specified number of instances? Imagine yourself a subject in that experiment:

First, list six instances in which you behaved assertively.

Next, evaluate how assertive you are.

Imagine that you had been asked for twelve instances of assertive behavior (a number most people find difficult). Would your view of your own assertiveness be different?...

The contest yielded a clear-cut winner: people who had just listed twelve instances rated themselves as less assertive than people who had listed only six. Furthermore, participants who had been asked to list twelve cases in which they had not behaved assertively ended up thinking of themselves as quite assertive! If you cannot easily come up with instances of meek behavior, you are likely to conclude that you are not meek at all. Self-ratings were dominated by the ease with which examples came to mind...

Psychologists enjoy experiments that yield paradoxical results, and they have applied Schwarz's discover with gusto. For example, people:

  • believe that they use their bicycles less often after recalling many rather than few instances
  • are less confident in a choice when they are asked to produce more arguments to support it
  • are less confident that an event was avoidable after listing more ways it could have been avoided
  • are less impressed by a car after listing many of its advantages

Editor's note: PEOPLE ARE SO WEIRD!!!!!


Added on by Spencer Wright.

From Thinking, Fast and Slow. Emphasis mine.

A very generous estimate of the correlation between the success of the firm and the quality of its CEO might be as high as .30, indicating 30% overlap. To appreciate the significance of this number, consider the following question:

Suppose you consider many pairs of firms. The two firms in each pair are generally similar, but the CEO of one of them is better than the other. How often will you find that the firm with the stronger CEO is the more successful of the two?

In a well-ordered and predictable world, the correlation would be perfect (1) and the stronger CEO would be found to lead the more successful firm in 100% of the pairs. If the relative success of similar firms was determined entirely by factors that the CEO does not control (call them luck, if you wish), you would find the more successful firm led by the weaker CEO 50% of the time. A correlation of .30 implies that you would find the stronger CEO leading the stronger firm in about 60% of the pairs - an improvement of a mere 10 percentage points over random guessing, hardly grist for the hero worship of CEOs we so often witness. 

If you expected this value to be higher - and most of us do - then you should take that as an indication that you are prone to overestimate the predictability of the world you live in. Make no mistake: improving the odds of success from 1:1 to 3:2 is a very significant advantage, both at the racetrack and in business. From a perspective of most business writers, however, a CEO who has so little control over performance would not be particularly impressive even if her firm did well. It is difficult to imagine people lining up at airport bookstores to buy a book that enthusiastically describes the practices of business leaders who, on average, do somewhat better than chance. 

Yet more Kahneman

Added on by Spencer Wright.

From "Thinking, Fast And Slow," p.124. Emphasis mine.

In an experiment conducted some years ago, real-estate agents were given an opportunity to assess the value of a house that was actually on the market. They visited the house and studied a comprehensive booklet of information that included an asking price. Half the agents saw an asking price that was substantially higher than the listed price of the house; the other half saw an asking price that was substantially lower. Each agent gave her opinion about a reasonable buying price for the house and the lowest price at which she would agree to sell the house if she owned it. The agents were then asked about the factors that had affected their judgment. Remarkably, the asking price was not one of these factors; the agents took pride in their ability to ignore it. They insisted that the listing price had no effect on their responses, but they were wrong: the anchoring effect was 41%. Indeed the professionals were almost as susceptible to anchoring effects as business school student s with no real-estate experience, whose anchoring index was 48%. The only difference between the two groups was the students conceded that they were influenced by the anchor, while the professionals denied that influence.

Given the choice between a professional who won't admit their faults and a man-on-the-street who will, I'll take the latter every time.

More Kahneman

Added on by Spencer Wright.

Again, from "Thinking, Fast and Slow." Again, emphasis mine.

Reciprocal links are common in the associative network. For example, being amused tends to make you smile, and smiling tends to make you feel amused. Go ahead and take a pencil, and hold it between your teeth for a few seconds with the eraser pointing to your right and the point to the left. Now hold the pencil so the point is aimed straight in front of you, by pursing your lips around the eraser end. You were probably unaware that one of these actions forced your face into a frown and the other into a smile. College students were asked to rate the humor of cartoons from Gary Larson's The Far Side while holding a pencil in their mouth. Those who were "smiling" (without any awareness of doing so) found the cartoons funnier than did those who were "frowning." In another experiment, people whose face was shaped into a frown (by squeezing their eyebrows together) reported an enhanced emotional response to upsetting pictures - starving children, people arguing, maimed accident victims.

Simple, common gestures can also unconsciously influence our thoughts and feelings. In one demonstration, people were asked to listen to messages through new headphones. They were told that the purpose of the experiment was to test the quality of the audio equipment and were instructed to move their heads repeatedly to check for any distortions of sound. Half the participants were told to nod their head up and down while others were told to shake it side to side. The messages they heard were radio editorials. Those who nodded (a yes gesture) tended to accept the message they heard, but those who shook their head tended to reject it. Again, there was no awareness, just a habitual connection between attitude of rejection or acceptance and its common physical expression. You can see why the common admonition "act calm and kind regardless of how you feel" is very good advice: you are likely to be rewarded by actually feeling calm and kind. 

These are lessons that I should fully integrate into my everyday life. All the time I find myself scrunching my eyebrows and pursing my lips, and I'm sure it effects my overall mood. I imagine that I seem to see my work as a curse to be endured, whereas I truly enjoy and relish it... Kahneman leaves me somewhat unsure, though at least he gives a clear remedy.

=> :-)

More Kahneman

Added on by Spencer Wright.
A disturbing demonstration of depletion effects in judgment was recently reported in the Proceedings of the National Academy of Sciences. The unwitting participants in the study were eight parole judges in Israel. They spend entire days reviewing applications for parole. The cases are presented in random order, and the judges spend little time on each one, an average of 6 minutes. (The default decision is denial of parole; only 35% of requests are approved. The exact time of each decision is recorded, and the times of the judges’ three food breaks – morning break, lunch, and afternoon break – during the day are recorded as well.) The authors of the study plotted the proportion of approved requests against the time since the last food break. The proportion spikes after each meal, when about 65% of request are granted. During the two hours or so until the judges’ next feeding, the approval rate drops steadily, to about zero just before the meal. As you might expect, this is an unwelcome result and the authors carefully checked many alternative explanations. The best possible account of the data provides bad news: tired and hungry judges tend to fall back on the easier default position of denying requests for parole. Both fatigue and hunger probably play a role.

Daniel Kahneman, Thinking, Fast and Slow; emphasis mine.

The effect of total bullshit

Added on by Spencer Wright.

This week I somehow came across the Seminars About Long Term Thinking podcast, and listened to an episode with the psychologist Daniel Kahneman. At one point in the discussion, he mentioned a study by Paul Rozin that investigated the effect that placing a label saying "cyanide" on a bottle had on participants' willingness to drink the contents inside.

The results of the study, copied here from the Journal of Personality and Social Psychology under the title "Operation of the Laws of Sympathetic Magic in Disgust and Other Domains" (emphasis is mine):

Cyanide label-1. In this procedure, we ascertain whether the label "sodium cyanide" imparts its quality to the substance it labels...Subjects returned to their seat at the table and were presented with two brown glass 500ml "chemical" bottles, each about one-quarter filled with a white powder, which was, in fact, sucrose. One had a typed label on it that said "Sucrose (Table sugar)," the other had a typed label that said "Sodium Cyanide" with a red printed "Poison" sticker below it. The experimenter said:
"Here we have two bottles with powder in them. The powder in both bottles is sucrose, that is, table sugar. These are brand new bottles that we just bought. They never had anything in them but sugar. This bottle (on the subjects' left) has a sucrose label that we put on it. It's a brand new label, that was never on any other bottle. This other bottle (on the subjects' right) has a brand new sodium cyanide label on it. This label was never on any other bottle and was never even near cyanide. Remember, sugar is in both bottles."
The experimenter set out two different colored plastic cubs, one in front of each bottle, and poured water from a glass pitcher into both, until they were about half full. Now, using separate, new plastic spoons for each bottle, the experimenter put a half spoonful of powder from the "sugar" bottle into one cup, and stirred it. The spoon was discarded, and the same was done with the sugar in the cyanide bottle, with a new spoon. The subject then rated, on the 200mm line, how much he would like to drink from each of the cups, and stated a preference between the two. The subject was then asked to take a sip of the sugar water from the preferred cup, and subsequently to account for his or her choice.
Cyanide label-2. We thought avoidance of the cyanide-labeled bottle might be motivated by doubts about the real contents of the bottle (though it seems absurd that the experimenter woudl try to poison the subject by offering a poison-labeled bottle). For this reason, in the second sequence, the subject himself labels the bottles. Initially, we performed this second test only for subjects who indicated a substantial preference for the sugar-labeled bottle's contents. The last 20 subjects, however, were run on this procedure independent of their results on the first sequence. The total N for the second procedure was 38; that is, 12 subjects were eliminated on the basis of their performance on the first cyanide test.
Previously used bottles and glasses were taken away, and two similar, empty bottles were brought out. The covers were removed, and sugar from a 5-lb box of locally sold "Domino" sugar (sucrose) was poured into each bottle (to a level of about one-third full). The subject was then given two peel off labels on a piece of paper. On read "Sucrose (table sugar)," the other read "Sodium Cyanide." (Through an error, this cyanide label did not have a red "Poison" sticker affixed to it.) The subject was asked to put one label on each bottle, in any way he wanted. Then, the procedure used for Cyanide Label 1 was repeated (mixing sugar water, rating of both solutions, indicating a preference, and sipping the preferred solution). 
The sugar labeled as "Sucrose" was preferred to the sugar labeled as "Sodium Cyanide" by 41 of 50 subjects (p < .001). The mean difference between the cyanide- and sugar-label ratings was -30.58 (p < .001). When asked to explain their choice, the most common responses were reference to the label, and no response. Only 1 subject suggested the possibility that there might be cyanide in the cyanide-labeled bottle. The second cyanide manipulation, in which the subject put the labels on herself, showed a much smaller but still significant effect, with a net difference of 16.5 points between cyanide and sugar.



This reminds me of the anchoring effect, described famously by Tversky and Kahneman in 1974 (nb. I was aware of this study previously - it comes up a lot in the literature on negotiation - but certainly couldn't have told you who the authors were. Before setting out to write this post, Kahneman's name would have meant nothing to me.). From their paper, "Judgment under Uncertainty: Heuristics and Biases" (emphasis is mine):

Insufficient adjustment. In a demonstration of the anchoring effect, subjects were asked to estimate various quantities, stated in percentages (for example, the percentage of African countries in the United Nations). For each quantity, a number between 0 and 100 was determined by spinning a wheel of fortune in the subjects' presence. The subjects were instructed to indicate first whether that number was higher or lower than the value of the quantity, and then to estimate the value of the quantity by moving upward or downward from the given number. Different groups were given different numbers for each quantity, and these arbitrary numbers had a marked effect on estimates. For example, the median estimates of the percentage of African countries in the United Nations were 25 and 45 for groups that received I0 and 65, respectively, as starting points. Payoffs for accuracy did not reduce the anchoring effect. 

Studies like these are totally fascinating to me, and have the effect of reinforcing the skepticism that I am inclined to approach all statements which lack some method of independent verification. I also try to remain aware of the danger of taking self-reported data at face value: In my experience, people (including myself) are notoriously bad at knowing what's going on in their own heads.

For the intrepid among you, there's a bunch of great throwaways on anchoring on its wikipedia page. An excerpt:

Even when the anchor value is obviously random or extreme, it can still contaminate estimates. One experiment asked subjects to estimate the year of Albert Einstein's first visit to the United States. Anchors of 1215 and 1992 contaminated the answers just as much as more sensible anchor years. Other experiments asked subjects if the average temperature in San Francisco is more or less than 558 degrees, or whether there had been more or fewer than 100,025 top ten albums by The Beatles. These deliberately absurd anchors still affected estimates of the true numbers.

Insane. It's worth stating explicitly that, when entering into negotiation, one should be acutely aware - and wary - of anchoring strategies.