Weekly Roundup 182: A Curated Linkfest For The Smartest People On The Web!

Dear Readers,

I want to take a minute to apologize for missing the last two weekly roundups. I experienced some personal setbacks and did not have the energy to work on the site. Luckily, times are turning around and I am reinvigorated to share what I read (with you). I promise to resume our monthly interviews immediately; in fact a new website will soon be released to house these interviews. Again thank you for your patience.

One last thing, my friend Michael Mauboussin @ Legg Mason put together a fantastic reading list for my friend Yaser Anwar and has given me permission to share it.

Best Regards,


Michael Mauboussin’s Behavioral Economics Reading List:

Recommended Books:

1. Thinking, Fast and Slow by Daniel Kahneman (Farrar, Straus and Giroux, 2011).
Comment: A sweeping review of the work of the greatest psychologist of the past half century.
2. Judgment in Managerial Decision Making — Seventh Edition by Max H. Bazerman and Don Moore (John Wiley & Sons, 2008)
Comment: A great source for heuristics and biases
3. Expert Political Judgment by Philip Tetlock (Princeton University Press, 2005)
Comment: Are you still listening to expert prognosticators? A devastating, empirical study of how bad expert predictions are in complex realms.
4. The Halo Effect by Phil Rosenzweig (Free Press, 2006)
Comment: Lots of lessons in 175 pages–you’ll never look at the world the same way after reading this one.
5. The Winner’s Curse by Richard Thaler (Princeton University Press, 1992)
Comment: The contents are the foundation of what we call behavioral finance.
Recommended Articles:

1. “On the Psychology of Prediction” by Daniel Kahneman and Amos Tversky (Psychological Review, Vol. 80, No. 4, July 1973, 237-251)
Comment: Kahneman said this was his favorite paper. This explains the inside-outside view.
2. “Prospect Theory: An Analysis of Decision Under Risk” by Daniel Kahneman and Amos Tversky (Econometrica, Vol. 72, No. 2, March 1979, 263-292)
Comment: A clear and compelling discussion of how behavior varies from what utility theory predicts.

3. “A Survey of Behavioral Finance” by Nicholas C. Barberis and Richard H. Thaler (in George Constantinides, Milton Harris, and Rene Stulz, eds.Handbook of Economics of Finance: Volume 1B, Financial Markets and Asset Pricing, Elsevier North Holland, Chapter 18, 1053-1128)
Comment: Exactly as advertised–what you need to know about behavioral finance in one place.

4. “Conditions for Intuitive Expertise: A Failure to Disagree” by Daniel Kahneman and Gary Klein (American Psychologist, Vol. 64, No. 6, September 2009, 515-536)
Comment: We overestimate the abilities of experts. But they do work in certain settings. This explains when you can trust an expert.

5. “Hindsight ≠ Foresight: The Effect of Outcome Knowledge on Judgment Under Uncertainty” by Baruch Fischhoff (Journal of Experimental Psychology: Human Perception and Performance, Vol. 1, No. 3, August 1975, 288-299)
Comment: Hindsight bias and creeping determinism. Big problems.

Cartoons of the Week

Best Reads of the Week

Dan Ariely: A Beginner’s Guide to Irrational Behavior (Free Behavioral Economics Course)via Coursera – In this course we will learn about some of the many ways in which people behave in less than rational ways, and how we might overcome these problems

Ted Talk: Strange answers to the psychopath testvia Video on TED.com – Is there a definitive line that divides crazy from sane? With a hair-raising delivery, Jon Ronson, author of The Psychopath Test, illuminates the gray areas between the two. (With live-mixed sound by Julian Treasure and animation by Evan Grant.)

Thomas Friedman, Jay Mariotti, and TED: great stories about eviscerated subjects.via Slate Magazine – Our reaction to stories in which the subject gets strafed by flying adjectives is mostly There but for…. A good takedown is tricky because you’ve got to believe, ultimately, that he/she/it totally deserved it, too. This is certainly true of the following pieces, whose eviscerated subjects include Thomas Friedman, Jay Mariotti, and TED talks. (Incidentally, Spy’s roast of Ivana Trump isn’t in a downloadable format, but it’s too good not to note.)

Imaging Conflict Resolutionvia Edge – The advantage of neuroscience is being able to look under the hood and see the mechanisms that actually create the thoughts and the behaviors that create and perpetuate conflict. Seems like it ought to be useful. That’s the question that I’m asking myself right now, can science in general, or neuroscience in particular, be used to understand what drives conflict, what prevents reconciliation, why some interventions work for some people some of the time, and how to make and evaluate better ones.

Risk Intelligence, the Art of Uncertainty, and the Flawed Psychology of Airport Securityvia Brain Pickings – In Risk Intelligence: How to Live with Uncertainty (public library), Dylan Evans explores the psychology, sociology, and politics of uncertainty through what he calls “risk intelligence” — the essential skill of learning the boundaries of our knowledge and using that insight in honing our humanly flawed decision-making.

The Chase Is the Thing and the Thing Is the Chase: Learning to Love Failurevia Splitsider – First off – the terror you’re feeling will never go away if you choose to go into this field. That’s just something I want to say very bluntly right at the top. There is no sugar coating that. I know it’s horrible to hear, but the terror ain’t going nowhere. That fear will manifest itself many times over and in many ways and if you really can’t handle it, you should follow your gut instinct to not pursue acting and/or comedy. It’s a cliche thing to say in the acting world, but if there’s anything else you could envision yourself doing, do that thing. Not everything will be easier per se, but I imagine 90% of other professions fuck with your head less. There are so few things where you are judged on talent, personal appearance, drive, and where you have to live like shit for years to make it, where “overnight successes” are sometimes people who have worked for ten years plus, where even if every factor of motivation, ability, and talent line up perfectly, your success is still also determined at least partially (and in many cases, mostly) by luck. It’s a bad trip. It is not for everyone.

The Narco Tunnels of Nogalesvia Businessweek – Although quantification is impossible, the underground shipment routes represent a significant economic investment, one that far exceeds the time and money spent on the homemade submarines, ultralight aircraft, and catapults used to move narcotics elsewhere. Some tunnels cost at least a million dollars to build and require architects, engineers, and teams of miners to work for months at a stretch. A few include spectacular feats of engineering, running as much as 100 feet deep, with electric rail systems, elevators, and hydraulic doors. But the economies of scale are extraordinary. Tunnels like these can be used to move several tons of narcotics in a single night.

Human cycles: history as sciencevia KurzweilAI – Advocates of “cliodynamics” say that they can use scientific methods to illuminate the past. But historians are not so sure, Nature News reports.

Things We Know That Aren’t True, Poverty and Terrorism Editionvia www.psmag.com – But even there, the relationship wasn’t what you might think: countries with the most freedoms were, as you would guess, not at the greatest risk of spawning terrorism; but nor were those with the most severe and restrictive authoritarian regimes! It was the countries in the middle range that had the most potential for emerging militancy. “Intermediate levels of political freedom are often experienced during times of political transitions,” writes Abadie. “When governments are weak, political instability is elevated, so conditions are favorable for the appearance of terrorism.” Which may explain why we saw official Western reactions like these after the Arab Spring.

Infographic: How to Generate Good Ideasvia columnfivemedia.com – We determined the better question to ask was “How are good ideas generated?” Good ideas—as we suggest in this video—are the result of the focused action that takes place in our brains. What better metaphor for this focus, we thought, than a prism? With a bit of stretching the laws of physics and a lot of imagination, we set out to craft a story about how all those bits and pieces that pass through our brains can become good ideas.

About Miguel Barbosa

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19. August 2006 by Miguel Barbosa
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