The Freakonomics episode The Men Who Started a Thinking Revolution from January this year induced me to get a copy of Michael Lewis’s latest book The Undoing Project. However, having read Daniel Kahneman and Amos Tversky’s papers on Prospect Theory and the Framing of Decisions, as well as Kahneman’s Thinking, Fast and Slow, I was not sure whether I would enjoy a re-iteration of their ideas from an outsider’s perspective. My concerns actually turned out to be unfounded. The book does not intend to be a pure summary of Kahneman and Tversky’s research. It has a distinct novel touch; Michael Lewis tells the story of Kahneman and Tversky’s partnership beyond what is recorded in their papers and the book. It provides one with the context when reading about their insights into the heuristics and biases in decision-making, and Prospect Theory. For me, especially the second chapter The Outsider (aka Kahneman), and the third chapter The Insider (aka Tversky) put another complexion on their academic works and accomplishments. Admittedly, the book has strengths and weaknesses. The introduction, for example, is not very interesting if (1) you are not a baseball fan or (2) you have not read Michael Lewis’s 2003 book Moneyball. The many quotes and memos from Kahneman and Tversky, however, make up for this mediocre introduction. They are plainly ingenious and I collected my favourites to not forget them. Here they are:
Amos Tversky’s notes on conversations with Danny Kahneman in Spring 1972
People predict by making up stories
People predict very little and explain everything
People live under uncertainty whether they like it or not
People believe they can tell the future if they work hard enough
People accept any explanation as long as it fits the facts
The handwriting was on the wall, it was just the ink that was
People often work hard to obtain information they already have
And avoid new knowledge
Man is a deterministic device thrown into a probabilistic
In this match, surprises are expected
Everything that has already happened must have been inevitable (p.197)
Amos Tversky’s memorable sentences (collection by Don Redelmeier)
A part of good science is to see what everyone else can see but
think what no one else has ever said.
The difference between being very smart and very foolish is
often very small.
So many problems occur when people fail to be obedient when
they are supposed to be obedient, and fail to be creative when
they are supposed to be creative.
The secret to doing good research is always to be a little
underemployed. You waste years by not being able to waste
It is sometimes easier to make the world a better place than to
prove you have made the world a better place. (p.230)
Amos Tversky’s note to Danny Kahneman on Loss Aversion (appeared also in a 1977 draft of Prospect Theory)
The greater sensitivity to negative rather than positive changes is not specific to monetary outcomes. It reflects a general property of the human organism as a pleasure machine. For most people, the happiness involved in receiving a desirable object is smaller than the unhappiness involved in losing the same object. A high sensitivity to losses, pains, and noxious stimuli also has adaptive value. Happy species endowed with infinite appreciation of pleasures and low sensitivity to pain would probably not survive the evolutionary battle. (p.269-270)
If these paragraphs sound interesting, you might want to give the book a chance. Overall, I can recommend The Undoing Project to anyone who would like to know more about how the heuristics-and-biases programme came to be, and how Prospect Theory was born. For this, it is a worthwhile reading.
Dubner, S. (2017). The Men Who Started a Thinking Revolution. Available at: http://freakonomics.com/podcast/men-started-thinking-revolution/
Lewis, M. (2016). The Undoing Project: A Friendship that Changed the World. London: Allen Lane.