The Exchanges

Q Are there any particular lessons or memories that stand out for you?

A There are two of them that I speak about, so one is that I was, I was a psychologist very early on. That was, that was very clear. I, I wrote an essay, and before I was 11, Remember where, because it was, it was a German counterattack. It was during that period. We were in Paris, and I wrote an essay about faith and religion. And it was a very pompous essay. I had a little book that was, that was titled What I, what I write about what I think, something pompous like that. But the essay started with another pompous thing that I quoted Pascal. My, my sister had passed her exams, and I had read, you know, she studied some Pascal, and I had read it, and Pascal had said that Faith is God made sensible to the heart. And, you know, little me, I said, how true. That's what my essay said. And then, but then, I said, but faith is really hard to get. You don't say it's God all the time. So that's what religious pomp is for. Cathedrals, organ music, they give you, and I call that ersatz faith, sort of a substitute faith, because it's a, it's a similar feeling. It's got to do with God. And that's what you must do with it. That's, that's a psychologist. So it's clear that, you know, that was my calling, and so that's one significant memory of my childhood.

AI assessment note: “that's one significant memory of my childhood.”

Q Do you have any insights on how to do that?

A Keeping them short. You know, I'm not a professional at fixing meetings, so I, I have, I have a few ideas, but not an incomplete view. The, the question of structuring the meetings to be discussing topics one at a time, that I think is, is really useful. I'll give you an example. I mean, it's something that I suggested when I was consulting. But for some reason, people didn't buy that suggestion, so you, when an investment is being discussed, say, by an investment firm, some staff people, if it's a big investment, staff people will prepare a briefing book. With chapters. Now, our recommendation would be that the staff should end each chapter with a score. How does that chapter, taken on its own, independently of anything else, affect the likely decision? And then you could structure the meeting that discusses this, and the meeting of the board, say, to discuss these scores one at a time. That has the effect that I was talking about earlier, making the decision, making the judgments about the dimensions, we call them mediating assessments, is a little jargon term. The mediating assessments come first, and then you have a profile of them, and then you make a global judgment, and you can structure it. So if the staff has presented a score, And you discuss in the board, do we accept their score? You're forcing people to have a look at the evidence.

AI assessment note: “structuring the meetings to be discussing topics one at a time”

Q What do you wish that everybody knew about psychology that you don't think that they do? If that was class one, what's class two?

A You know, class two, which is a development from class one, you know, it's, it's the same idea extended. Class two is that behaviors don't necessarily reflect the personality, but behaviors have a lot to do with the situation. And so if people behave in strange ways, look at the situation they're in, and what are the pressures in the situation that make them act as well. So there is a bias that the social psychologists, well-known social psychologists call the fundamental attribution error, and that means that when you see people acting in some way, you think that it's because of their personality that they do it. That may not be the case. It's Quite likely that the situation is making them do it. I'd like people to know that motivation is complex, and that people do good things for a mixture of good and bad reasons, and they do bad things for a mixture of good and bad reasons, and I, I think that there is a point to educating people in psychology is to make them less judgmental. Just have more empathy and more patience, And being judgmental doesn't get you anywhere.

AI assessment note: “Class two is that behaviors don't necessarily reflect the personality”

Q You mentioned that there was procedures for thinking in organizations. Are there any that stand out in your mind that we could use to elevate thinking, and if not elevate, but give feedback on the quality of thinking to improve it?

A Well, I think one of the ideas that people like the most is an idea by Gary Klein, what he calls the premortem, and that's a, that's a universal winner. People really like that idea, and this is that when you're about to make a decision, a group, uh, not quite, because if you've made it, it's too late, but you're approaching it, and then you get people in a room, can be the people who are making the decision, And he said, suppose it's two years from now, and we made the decision that we're contemplating, and it turned out to be a disaster. Now, you have a page in front of you, write the history of that disaster in bullets. That's the premortal, and, and it's beautiful as an idea. It's beautiful because when people are coming close to a decision, it becomes Difficult to raise doubts or to raise questions. People who are slowing the group down when the group is nearing a decision are procedures really, you know, it's annoying, you know, there's, you want to get rid of them. And the premortem legitimizes that sort of dissent and that sort of doubts. Not only legitimizes it, you know, it rewards it. And so that's a very good idea. I don't, you know, I don't think that it's going to prevent people from making mistakes, big mistakes, but it could certainly, it will alert people to possible loopholes, to, to things that they ought to do to make a safer decision. So that's a, that's a …

AI assessment note: “one of the ideas that people like the most is an idea by Gary Klein”

Q Are there any particular lessons or memories that stand out for you?

A There are two of them that I speak about, so. One is that I was, I was a psychologist very early on. That was, that was very clear. I, I wrote an essay, ah, before I was 11. Remember where, because it was, it was a German counterattack. It was during that period we were in Paris. And I wrote an essay about faith and religion. And it was a very pompous essay. I had a little book that was, that was titled What I, what I write about what I think, something pompous like that. But the essay started with another pompous thing that I quoted Pascal. My, my sister had passed her exams and I had read, you know, she studied some Pascal and I had read it. And Pascal had said that faith is God made sensible to the heart. And, you know, little me, I said, how true. That's what my essay said. And then, but then, I said, but faith is really hard to get. You don't sense God all the time. So that's what religious pomp is for. Cathedrals, organ music, they give you, and I call that ersatz faith, sort of a substitute faith, because it's a, it's a similar feeling, it's got to do with God, and that's what you must do with it. That's, that's a psychologist. So it, it's clear that, you know, that was my calling, and so that's one significant memory of my childhood.

AI assessment note: “There are two of them that I speak about... that's one significant memory”

Q So you were born to be a psychologist?

A I think so. I think so. I mean, I, you know, it's always had that point of view that later, as a teenager, I was, you know, interested in All the philosophical issues, like, you know, does God exist, and what's good and bad, and stuff like that, and why shouldn't we masturbate, you know, serious questions. Um, but, but I discovered that, actually, I was less interested in the question of whether or not God exists than in why do people believe that he exists. That, I thought, was interesting. And I wasn't particularly interested in the question of what's good or bad, but I was really interested in what makes people angry and indignant. So, you know, I've had the psychological point of view since, turns out, since my childhood.

AI assessment note: “I think so. I think so.”

Q You have an interesting distinction between happiness and satisfaction. Can you walk us through that?

A Yeah, sure. I mean, the word happiness is so ambiguous, and it means so many things to many people, but one sensible interpretation of it is that it's got to do with your emotions, with how you feel, with the emotional tone of your life, whether it's a happy life, you know, it's pleasant to be you. Life satisfaction is a completely different thing. I mean, life satisfaction is how you feel about your life when you think about your life, and most of the time you don't think about your life, you just live, but, you know, sometimes you sort of look, and that's, that's when you determine how satisfied you are, that's life satisfaction. It's not satisfaction, it's life satisfaction.

AI assessment note: “happiness is... to do with your emotions... Life satisfaction is... when you think about your life”

Q Are there procedures to reduce noise? And conversely, it is noisy. It strikes me that the variation would be good, but maybe only in an evolutionary concept.

A Well, we call that noise is useless variability. I mean, variability can be very useful if you have a selection mechanism and some feedback. So evolution is built on variability, but, and of course it's useful. But noise among underwriters is useless. There's nothing. Nothing gets learned. There's no feedback. It's just noise. And it's costly. The first advice, of course, would be Algorithms, as I said earlier. So algorithms are better than people, than judgment. That's not intuitive, but it's really, it's really true. And, and after that, then, you know, the procedure that I mentioned earlier for making decisions in an orderly way by breaking it up into assessments, that's the best that we can do. And, and there is one very important aspect. That I haven't mentioned, but, and this is training people in what the scale is. So there is one piece of advice that you'd have for underwriters, that they should always compare the case to other cases. And if possible, if you can help them Share the same frame of reference with other underwriters who are going to cut down on the, on the noise.

AI assessment note: “The first advice, of course, would be Algorithms, as I said earlier.”

Q I want to come to intuition and noise later. Is there anything else that stands out that gets in the way of clear thinking that we can sort of bring to the surface now?

A Well, you know, what, what gets in the way of clear thinking is that we have We have intuitive views of almost everything, so as soon as you present a problem to me, I'll, you know, ask some ready-made answer, and what gets in the way of clear thinking, those ready-made answers, and we can't help but have them, so that's one thing that gets in the way. Emotions get in the way, and I would say that independent clear thinking Is, for first approximation, impossible? I mean, in the sense that, you know, we believe in things most of the time, not because we have good reasons to believe them. If you ask me for reasons, I'll explain you. I'll, I'll always find a reason, but the reasons are not the causes of our beliefs. We have beliefs because mostly we believe in some people, and we trust them, and we adopt their beliefs. So we don't reach our beliefs by clear thinking, something, you know, unless you're a scientist or doing something like that.

AI assessment note: “Emotions get in the way, and I would say that independent clear thinking Is”

Q I'm curious about the distinction between intuition and judgment. You had mentioned intuition, judgment, intuitive judgment. Can, can you walk me through some of, like, how those differ?

A It's a bit hard to separate. I mean, judgment is, is what you do when you integrate a lot of information informally into a score of some kind. I, we speak, we being my co-authors and I in the book we're writing, we speak of judgment as measurements. But it's measurement where the measuring instrument is your mind. But you do it informally. And because you do it informally, people are going to, are not necessarily going to agree. So, wherever we say it's a matter for judgment, we're allowing for differences, for variability. Now, judgment can be more or less slow, more or less systematic. So at one end, you have pure intuition, where you allow the judgment to go very quickly, and so on. And at the other end, you try to delay intuition, but ultimately, if you're making it by judgment, you're going to have a judgment, and it's going to be like an intuition.

AI assessment note: “judgment can be more or less slow... at one end, you have pure intuition”

Q Tell me about noise and decision making. Can you explain the concept?

A Yeah. I can really explain it by saying what, you know, was the beginning of it, and which was a consulting assignment in an insurance company where we, I had the idea of running a test to see whether people in a given role who are supposed to be interchangeable Agreed with each other. So, you know, when you come to an insurance company and an underwriter gives you a premium, the underwriter speaks for the company, and so it's, they expect that any underwriter, that it doesn't matter which underwriter you get for the premiums, and the company has that expectation. It shouldn't make much difference. So we tested that, and they constructed some cases And then we had some, like, 50 underwriters assess a premium for the case.

AI assessment note: “a test to see whether people in a given role who are supposed to be interchangeable”

Q When you talk about situational, one of the things that comes to mind is it's so easy for us to give our friends advice, but if we were in that situation, we might not necessarily see it. Why is that the case? Why is it so much easier to give other people advice?

A I mean, feelings get in the way of clear thinking. There is a phenomenon that we call the endowment effect, which is that when I'd ask for more money to sell you my sandwich than I'd pay to get it, I mean, that's essentially it. Our explanation of it, there are many explanations, but the story I like to tell about it is that it's more painful to give something up than to get something. But there is an interesting result that if you have an agent making decisions on somebody's behalf, that agent doesn't have loss of urge. So that agent sells and buys at the same price, which is the economically rational thing to do. Where this goes into policy and governments and really important things That governments are like agents or people who, who think about the good of society. And agents, they take the economic view. They take the view of what things will be like at the end. They don't figure out that there are some people who are going to be losing because of the reform that they're making. And it turns out that you can really expect losers, potential losers, to fight a lot harder than potential winners. And that's the reason that reforms so frequently fail, and that when they succeed, they're almost always way more expensive than anticipated, and they're more expensive because you have to compensate the losers, and, and that frequently is not anticipated. So that's, it's an example o…

AI assessment note: “feelings get in the way of clear thinking... an agent doesn't have loss”

Q Should we balance the two, or how would you think about them? Should we be more happy when we're younger, more satisfied when we're older?

A That thought had never occurred to me when I began to work on those. So I started out thinking that happiness, in that sense, of how you feel, When you live. That was reality, and that life satisfaction was just stories that people tell themselves, and the, the important thing was to be happy in real time. But later, when we did more research, it turned out that the circumstances that make people happy, and the circumstances that make them satisfied with their life, are not the same. So happiness is mostly social. It's, you know, it's being with people you love. Who love you back. That's, that's a lot of what happiness is. Life satisfaction is much more conventional. It's to be successful. And, you know, so it's money, education, prestige, that sort of thing is what life satisfaction is about. So those are two very different things. I thought that life satisfaction is irrelevant. You know, that's how I began. And we, we had a research program where we were We were trying to, you know, to show that this is the case. But then, after a few years, I realized that what people really want in their life is they don't seem to care about how happy they'll be. They seem to want to be satisfied with their life. They seem to want to have a good story about their life. And then I was in the position of saying that to define well-being in a way that people didn't seem to care particularly ab…

AI assessment note: “the circumstances that make people happy, and the circumstances that make them satisfied with their life, are not the same”

Q When you talk about situational, one of the things that comes to mind is it's so easy for us to give our friends advice, but if we were in that situation, we might not necessarily see it. Why is that the case? Why is it so much easier to give other people advice?

A I mean, feelings get in the way of clear thinking. There is a phenomenon that we call the endowment effect, which is that when I'd ask for more money to sell you my sandwich than I'd pay to get it, I mean, that's essentially it. Endowment effect. And our explanation of it, there are many explanations, but a story I like to tell about it is that it's more painful to give something up than to get something. But there is an interesting result that if you have an agent making decisions on somebody's behalf, that agent doesn't have loss of urge. So that agent sells and buys at the same price, which is the economically rational thing to do. Where this goes into policy and governments and really important things, that governments are like agents or people who, who think about the good of society. And agents, they take the economic view. They take the view of what things will be like at the end. They don't figure out that there are some people who are going to be losing because of the reform that they're making. And it turns out that you can really expect losers, potential losers, to fight a lot harder than potential winners. And that's the reason that we form so frequently fair, and that when they succeed, they're almost always way more expensive than anticipated, and they're more expensive because you have to compensate the losers, and, and that frequently is not anticipated. So that…

AI assessment note: “feelings get in the way of clear thinking.”

Q Does that include weighting the different aspects of the problem differently, or do you highlight that in advance, or do you keep that?

A Yeah, I mean, it makes you see the trade-offs more clearly. Otherwise, when we don't follow that discipline, there is a way in which people form impressions. Very quickly you form an impression, and then you spend most of your time confirming it, instead of collecting evidence. And so, if accidentally your impression was in the wrong direction, you're going to confirm it, and you don't give yourself a chance to correct it. Independence is the key. Because otherwise, when you don't take those precautions, it's like having a bunch of witnesses to some crime and allowing those witnesses to talk to each other. They're going to be less valuable if you're interested in the truth than keeping them rigidly separate and collecting what they have to say.

AI assessment note: “makes you see the trade-offs more clearly. Otherwise, when we don't follow that discipline”

Q Does that include weighting the different aspects of the problem differently, or do you highlight that in advance, or do you?

A Yeah, I mean, it makes you see the trade-offs more clearly. Otherwise, when we don't follow that discipline, there is a way in which people form impressions. Very quickly, you form an impression, and then you spend most of your time confirming it instead of collecting evidence. And so, if accidentally your impression was in the wrong direction, you're going to confirm it, and you don't give yourself a chance to correct it. Independence is the key, because otherwise, when you don't take those precautions, it's like having a bunch of witnesses to some crime, and allowing those witnesses to talk to each other. They're going to be less valuable if you're interested in the truth than keeping them rigidly separate and collecting what they have to say.

AI assessment note: “Yeah, I mean, it makes you see the trade-offs more clearly.”