A really good ‘think differently’ summer read from the great behavioural science and marketing guru, here are my highlights:

A rational leader suggests changing course to avoid a storm. an irrational one can change the weather.

If you are wholly predictable people will learn to hack you.

The trouble with market research is that people don’t think what they feel, they don’t say what they think, and they don’t do what they say’.? ( a very good thing evolution wise - the hare, if it needs to think about zig zagging will give a second order signal to its predator, if it doesn’t think there’s no advance warning. A very bad thing for direct questioning of customer motives )

Had Darwin waited 150 years, he could have saved a great deal of trouble and seasickness, in uncovering our primate ancestry, had he been able to see that the single most oft purchased item in our supermarkets is a banana.

An inability to change perspective is equivalent to a loss of intelligence.

The constraint of decision making in business and government, is that there’s a narrow and tightly limited area within which economic theory is allowed to act. At the edge economic theory becomes a limiting creed than a methodological tool.

As we have gained access to more data, processing power and communications, we may be losing the ability to see things more than one way. The more data we have, the less room there is for things that cannot be easily used in computation. Technology may have equipped us with a rational straight jacket that limits our ability to solve problems. [ Rory unwittingly makes a case for Bayesian flow type methodologies which have no a priori assumptions]

Maths has the power to mislead as well as to illuminate, people who are not skilled at mathematics tend view second-rate maths with a high level of credulity, and attach almost mystical significance to their findings. Bad maths is the palmistry of the twenty-first century.

For example from a mathematical point of view an ensemble perspective is not the same as a time-series perspective. It is most often the time-series perspective that is the better analogue of real life. What happens on average when a thousand people do something once is not a clue to what will happen when one person does something a thousand times. If you offered ten people ￡10m to play Russian roulette once, two or three people might be interested, but no one would accept ￡100m to play 10 times in a row: evolved human instinct would appear to be much better than modern economists. [I worry here about the aggregate methodologies employed in necessarily spare models - clearly ensemble methodologies at scale]

Conservative hiring - especially with single candidates. The penalties for a poor hire unconsciously cause the hirer to rate low variance [limited possibility of being a poor employee] on a par with high performance. In grouped hiring this goes away, ‘well 8 of them were good, so we can live with the 2 that weren’t’

Ambitious middle class parents game the hiring system ( grades, violin lessons, internships, charity work etc.) Much better to focus on outliers who have real talent that couldn’t possibly have been taught eg. A brilliant backgammon player is likely to be genuinely talented, parents are unlikely to have spent a fortune on private backgammon lessons ..

We are in the grip of an obsession with rational quantification. A nervous and bureaucratic culture is close mindedly attaching more importance to the purity of the methodology than to the possible value of solution. [ this is the paradox that the logical don’t get fired for making bad decisions if the methodology is judged as sound, and why entrepreneurs are often so successful at experiments that are off-limits to their rational cousins]

Today the principal activity of any public company is rarely the creation of products to satisfy a market need. Instead attention is directed to plausible sounding efficiency narratives to satisfy financial analysts many of whom know nothing about the businesses they claim to analyse. There is no need to prove your cost saving works empirically provided that it is consistent with standard economic theory. It is a simple principle of business that usually you won’t be fired for following economics even though its predictive value lies somewhere between water divining and astrology.

The conscious mind thinks it’s the Oval Office, when in reality it’s the press office. We believe that we’re issuing executive orders, when most of the time we’re constructing post-hoc rationalisations to explain decisions taken somewhere else. Eg. ‘I saw the bus coming and jumped back onto the kerb.’ When in fact you probably started jumping before you were consciously aware of the bus.

Our body is calibrated not to taste pure water, because it is valuable in evolutionary terms that we notice a deviation from its usual taste. The things we notice most are those that make no sense, it is perhaps necessary to deviate from standard rationality and do something apparently illogical to attract the attention of the subconscious and create meaning.

You cannot describe someone’s behaviour based on what you see, or what you think you see, because what determines their behaviour is what they think they’re seeing. [ He is a dissenter to the big data panacea as he states that most economic models are blind to this distinction - I’m wondering how quickly inference will evolve - I can see a kind of grokking that will take us all by surprise]

@ro