Dig way, way down into Irrationality of The Right. On Oct 30, 2008, at 9:26 AM, Rock Musician wrote:
> Dig deeper into it than common sense. > > > > > > ________________________________ > From: Gabrielle Obre <[EMAIL PROTECTED]> > To: AsburyPark@yahoogroups.com > Sent: Thursday, October 30, 2008 9:06:00 AM > Subject: [AsburyPark] Perception, Behavior, Taleb > > > Another attempt to get people to think about perception, how > unreliable we are at it, how we are manipulated emotionally, react > emotionally instead of rationally etc. Less far out there than the > consciousness stuff. What is it they say about the unexamined life? > > http://www.nytimes. com/2008/ 10/28/opinion/ 28brooks. html?em > > The New York Times > Printer Friendly Format Sponsored By > > October 28, 2008 > Op-Ed Columnist > The Behavioral Revolution > By DAVID BROOKS > > Roughly speaking, there are four steps to every decision. First, you > perceive a situation. Then you think of possible courses of action. > Then you calculate which course is in your best interest. Then you > take the action. > > Over the past few centuries, public policy analysts have assumed that > step three is the most important. Economic models and entire social > science disciplines are premised on the assumption that people are > mostly engaged in rationally calculating and maximizing their > self-interest. > > But during this financial crisis, that way of thinking has failed > spectacularly. As Alan Greenspan noted in his Congressional testimony > last week, he was "shocked" that markets did not work as anticipated. > "I made a mistake in presuming that the self-interests of > organizations, specifically banks and others, were such as that they > were best capable of protecting their own shareholders and their > equity in the firms." > > So perhaps this will be the moment when we alter our view of > decision-making. Perhaps this will be the moment when we shift our > focus from step three, rational calculation, to step one, perception. > > Perceiving a situation seems, at first glimpse, like a remarkably > simple operation. You just look and see what's around. But the > operation that seems most simple is actually the most complex, it's > just that most of the action takes place below the level of awareness. > Looking at and perceiving the world is an active process of > meaning-making that shapes and biases the rest of the decision-making > chain. > > Economists and psychologists have been exploring our perceptual biases > for four decades now, with the work of Amos Tversky and Daniel > Kahneman, and also with work by people like Richard Thaler, Robert > Shiller, John Bargh and Dan Ariely. > > My sense is that this financial crisis is going to amount to a > coming-out party for behavioral economists and others who are bringing > sophisticated psychology to the realm of public policy. At least these > folks have plausible explanations for why so many people could have > been so gigantically wrong about the risks they were taking. > > Nassim Nicholas Taleb has been deeply influenced by this stream of > research. Taleb not only has an explanation for what's happening, he > saw it coming. His popular books "Fooled by Randomness" and "The Black > Swan" were broadsides at the risk-management models used in the > financial world and beyond. > > In "The Black Swan," Taleb wrote, "The government-sponsore d > institution Fannie Mae, when I look at its risks, seems to be sitting > on a barrel of dynamite, vulnerable to the slightest hiccup." > Globalization, he noted, "creates interlocking fragility." He warned > that while the growth of giant banks gives the appearance of > stability, in reality, it raises the risk of a systemic collapse > "when one fails, they all fail." > > Taleb believes that our brains evolved to suit a world much simpler > than the one we now face. His writing is idiosyncratic, but he does > touch on many of the perceptual biases that distort our thinking: our > tendency to see data that confirm our prejudices more vividly than > data that contradict them; our tendency to overvalue recent events > when anticipating future possibilities; our tendency to spin > concurring facts into a single causal narrative; our tendency to > applaud our own supposed skill in circumstances when we've actually > benefited from dumb luck. > > And looking at the financial crisis, it is easy to see dozens of > errors of perception. Traders misperceived the possibility of rare > events. They got caught in social contagions and reinforced each > other's risk assessments. They failed to perceive how tightly linked > global networks can transform small events into big disasters. > > Taleb is characteristically vituperative about the quantitative risk > models, which try to model something that defies modelization. He > subscribes to what he calls the tragic vision of humankind, which > "believes in the existence of inherent limitations and flaws in the > way we think and act and requires an acknowledgement of this fact as a > basis for any individual and collective action." If recent events > don't underline this worldview, nothing will. > > If you start thinking about our faulty perceptions, the first thing > you realize is that markets are not perfectly efficient, people are > not always good guardians of their own self-interest and there might > be limited circumstances when government could usefully slant the > decision-making architecture (see "Nudge" by Thaler and Cass Sunstein > for proposals). But the second thing you realize is that government > officials are probably going to be even worse perceivers of reality > than private business types. Their information feedback mechanism is > more limited, and, being deeply politicized, they're even more likely > to filter inconvenient facts. > > This meltdown is not just a financial event, but also a cultural one. > It's a big, whopping reminder that the human mind is continually > trying to perceive things that aren't true, and not perceiving them > takes enormous effort. > > > > > > > [Non-text portions of this message have been removed] > > > ------------------------------------ > > Yahoo! Groups Links > > > ------------------------------------ Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/AsburyPark/ <*> Your email settings: Individual Email | Traditional <*> To change settings online go to: http://groups.yahoo.com/group/AsburyPark/join (Yahoo! 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