Category Archives: Audio

Daniel Kahneman – A Bat and a Ball Cost $1.10

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Daniel KahnemanRIP Danny. Thank you for your insights and stories. I’m glad of the opportunity to know your work. You made a difference.

[Update 9/8/2010 A paper Danny co-authored, “Income’s Influence on Happiness” has just been released.]

… the bat costs $1 more than the ball. How much does the ball cost? Daniel Kahneman KNOWS that the first thought that entered your head was $.10–even if you’re a Computer Science major at MIT. But that’s the wrong answer.

Daniel Gilbert’s “Stumbling On Happiness” led me to Nicholas Taleb’s “Fooled By Randomness“. Both books cite the work of Danny Kahneman. I blogged a bit about him here. I have been rummaging around the internet looking for whatever I can find on Danny and his work and have come up with some excellent content. But let me give you a taste of the sort of fascinating facts you’ll hear in Danny’s lectures first.

In a study Danny (I don’t know him personally but after listening to all these lectures, I feel as though I do. He could no doubt name the cognitive bias this suggests) mentions in one of his talks, people are asked how much pleasure they derive from their car. They are then asked enough questions about the car to determine its blue book (resale) value. It turns out that there IS a correlation between the amount of pleasure the subject reported and the dollar value of the car. i.e. Yes, that late model BMW in the garage DOES give you more pleasure than my 20 year old Honda would. BUT! They then go on to ask the subject if they find their commute to work pleasurable, and guess what?– nobody does!. It turns out that the ONLY time people derive pleasure from their car is when they are THINKING about it.

From Wikipedia:
With Amos Tversky (Kahneman’s longtime research partner, with whom he would have shared the Nobel prize had Tversky not died in 1996) and others, Kahneman established a cognitive basis for common human errors using heuristics and biases (Kahneman & Tversky, 1973, Kahneman, Slovic & Tversky, 1982), and developed Prospect theory (Kahneman & Tversky, 1979). He was awarded the 2002 the Nobel Prize in Economics for his work in Prospect theory.

Major Contributions:

  • anchoring and adjustment -describes the common human tendency to rely too heavily, or “anchor,” on one trait or piece of information when making decisions.
  • availability heuristic -where people base their prediction of the frequency of an event or the proportion within a population based on how easily an example can be brought to mind.
  • conjunction fallacy -when it is assumed that specific conditions are more probable than a general condition that contains the specific condition. (i.e. You think you’re MORE likely to die in an air disaster brought on by a terrorist event, than you are to die in ANY kind of air disaster).
  • framing (economics) -reversals of preference when the same problem is presented in different ways. (10% fat vs. 90% fat-free!)
  • loss aversion -the tendency for people strongly to prefer avoiding losses than acquiring gains. (Why New Yorkers stay in New York for the culture, and Angelenos stay in LA for the weather!!).
  • peak-end rule – we judge our past experiences almost entirely on how they were at their peak (pleasant or unpleasant) and how they ended.
  • prospect theory -how people make choices in situations where they have to decide between alternatives that involve risk.
  • reference class forecasting -predicts the outcome of a planned action based on actual outcomes in a reference class of similar actions.
  • simulation heuristic – people determine the likelihood of an event based on how easy it is to picture mentally. (Why we buy lottery tickets.)
  • status quo bias -in other words, people like things to stay relatively the same.

Media – Most of these lectures have a fairly long-winded intro. Skip ahead if you don’t need the background info.

Explorations of the Mind – Well-Being: Living and Thinking About It. (YouTube)

Conversation With History – Intuition and Rationality. (YouTube)

Conversation With History – Intuition and Rationality. (Audio)

Explorations of the Mind – Intuition: The Marvels and the Flaws. (YouTube)

Nobel Prize Lecture. (YouTube)

Update March 2009- Kahneman and Taleb on the same stage discus the crash. (YouTube)

Update March 2010. From the February 2010, Ted Talk Daniel Kahneman: The riddle of experience vs. memory. (YouTube)

Found a few more DK links.
A Perspective on Judgment and Choice 24pg. PDF doc. on the subject of his Nobel Prize.
The Allais Paradox Wired magazine 10/10 (Archive)

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EconTalk – Taleb on Black Swans (2007)

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Don’t know how I missed having this in here. NNT lists this as one of his favorite interviews as well.
From the highly addictive and always excellent EconTalk.org. (iTunes subsrciption link here. 2007 2008)

Nassim Taleb talks about the challenges of coping with uncertainty, predicting events, and understanding history. This wide-ranging conversation looks at investment, health, history and other areas where data play a key role. Taleb, the author of Fooled By Randomness and The Black Swan, imagines two countries, Mediocristan and Extremistan where the ability to understand the past and predict the future is radically different. In Mediocristan, events are generated by a underlying random process that is normally distributed. These events are often physical and observable and they tend to cluster around the middle. Most people are near the average height and no adult is more than nine feet tall. But in Extremistan, the right-hand tail of events is thick and long and the outlier, the seemingly wildly unlikely event is more common than our experience with Mediocristan would indicate. Bill Gates is more than a little wealthier than the average. The civil war in Lebabon or the events of 9/11 were more worse than just a typical bad day in the Beirut or New York City. Taleb’s contention is that we often bring our intuition from Mediocristan for the events of Extremistan, leading us to error. The result is a tendency to be blind-sided by the unexpected.

Play

India Today Conclave 2010

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NNT spoke in India March 12, 2010.
(Click arrow to listen) NNT India

Update 03/11 YouTube videos coming in now.
Intro and Part 0 (I think, seems to have been mislabled as Part 5)

Part 1

Part 2

Part 3

Part 4
Banking system still weak: Taleb
Nivedita Mukherjee

 

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What is the power of the unknown? What can be the impact of invisibles? Well, the answer is in the realm of the unknown, according to Nassim Nicholas Taleb, author of Black Swan, philosopher and expert on risk engineering, who is now penning his thoughts on living in a world we do not understand.

The management guru has no accurate answer but, based on the current risk environment, a plethora of clues on the shape of things to come. At times, revolutions like the Internet are triggered off by intentions other than initially thought of, he said. For instance, he said it was former US president Ronald Reagan’s obsession with the destruction of the Soviet Union that sparked the Internet revolution.

Taleb believes that nation-states, which he describes as modern inventions, are very unstable, especially in the Western world. Already, as he pointed out, six million people are unemployed in the US and the centre of the world is moving away from the West.

Addressing the widespread intellectual ferment over the stability of the current financial system, Taleb hinted that governments would be better off relying on positive revenues like household savings. The banking system is still weak and Europe and the US are hit hard by deficits. In fact, according to Taleb, the US with its high GDP and high spending is far more fragile than India and Russia. The solution, Taleb said, lies in breaking the back of the debt system.

 

 

 

Danny Kahneman at TED Experience vs. Memory

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Daniel Kahneman: The riddle of experience vs. memory

Update March 2010. From the February 2010 Ted talks.

Audio Only.

This is such a great talk. I’m now being able to apply Danny’s insights. I don’t trust my remembering self
and so don’t bias future experience, i.e. when the thought of a specific task, chore or other responsibility
causes a negative reaction, I don’t value it. Because what I’m finding is that, by and large, my memory of
negative experiences is worse than the experience itself.

Also, when a situation is about to come to a close, but it’s ending badly, I’ll extend the experience long
enough that the last thing that happens isn’t negative. For example, this morning I was awoken by a
loud noise a neighbor was making. Rather than get up angry and frustrated, I stayed in bed. The noise
ended shortly thereafter and I managed to get another 10 minute cat nap. I woke up refreshed and with
the sense I’d had a good night sleep.

“Randomness” – 2008 IdeaFestival

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“Randomness” by philosopher and scholar of randomness Nassim Nicholas Taleb at the 2008 IdeaFestival – proudly sponsored by the University of Kentucky a Presenting Sponsor of the international IdeaFestival.

Part one.

Part two.

Founded in 2000, the IdeaFestival is a world-class event that attracts diverse and leading thinkers from across the nation and around the globe to explore and celebrate innovation and cutting-edge ideas. It is a unique non-linear program designed to stretch people’s thinking, utilizing multiple venues to showcase and discuss important ideas in science, the arts, design, business, film, technology, education, etc. The Festival is designed to appeal to a broad cross-section of people – and presenters are selected for their ideas and accomplishments, and their ability to communicate to a wide-ranging audience.