0:00:04i
0:00:16actually a little bit about the irrational behaviour not use of course other people's
0:00:22so after being committee for a for a few years the realise that the right
0:00:27and then we could papers is not the that exciting you know i don't know
0:00:31how many of those you read but
0:00:32it's not fun to read and often not for interactive and was to right
0:00:36so decide to try and write something a more final
0:00:40in i a came up with an idea that i write the cookbook
0:00:44in the type of form a cookbook was going to be dining without from the
0:00:47other three tingles a distinct
0:00:51then it was going to be look at life through the kitchen that was quite
0:00:54excited about this is going to talk about the little that the but research a
0:00:57little bit about the kitchen you know we do so much from the kitchen i
0:01:00thought this would be interesting and i wrote a couple of chapters and i two
0:01:04key to mit press and they said you know cute but not for us going
0:01:08to find somebody else
0:01:10i tried that the people and everybody said the same thing executes
0:01:13not for us an internal somebody said
0:01:17look if you serious about these you first have to write the book about your
0:01:21research you have to but something and then you'll get the opportunity to write something
0:01:25else if you really want to do you have to do it so i stimuli
0:01:28we don't want to write about my research i do this all day long i
0:01:31want to write something else something be more free less constrained
0:01:35in this a person was very and force fluency look that's the only way you'll
0:01:39have to do it so set okay if i have to do it either sabbatical
0:01:43a set of rights about my research of does not away and then only to
0:01:47do my cookbook so wrote the
0:01:50a book and my research
0:01:52time to be quite fine in two ways first of all i enjoyed
0:01:56writing but the more interesting thing was that i start learning from people
0:02:01different time to write because the so much feedback you can get some people write
0:02:05me about the personal experience in about the of examples and what we disagree and
0:02:10nuances anything being here i mean the last two days that i've known really high
0:02:15so say obsessive behaviour i never i
0:02:20which i think it just fascinated i will tell you a little bit about irrational
0:02:24behaviour and i want to start by giving a some examples of visual illusion is
0:02:28a metaphor for rationality still think about these two tables and you must have seen
0:02:32disillusion you fast you want longer the vertical line of table on the last or
0:02:38the horizontal line on the table on the right
0:02:40which one scenes longer
0:02:42can anybody see anything but the last one being longer no right is impossible at
0:02:47the next thing about visually chinese we can easily demonstrate mistakes second put some lines
0:02:52on all doesn't help i can i think make the lines into the extent you
0:02:56believe me again shrink the lines which i didn't i proving to you met your
0:03:01eyes more
0:03:02deceiving you
0:03:03no the interesting thing about this is gonna take the lines away
0:03:06it's as if you haven't learned anything in the last minute click on
0:03:12you can't look at this instead of being now i see reality as it is
0:03:15right it impossible to overcome this
0:03:18sense that this is indeed longer our intuition is really folding as in the repeatable
0:03:22predictable consistent while is almost nothing we can do about it aside from taking a
0:03:26ruler and starting to measurement
0:03:29is another one is one of my favourite illusion what do you see the colour
0:03:32that the top airways pointing to
0:03:36braun thank you the bottom one
0:03:38yellow turns out to identical
0:03:41can anybody see them as identical very high i can cover the rest of the
0:03:46cube at twenty five cover the rest of the cube you can see that are
0:03:48identical
0:03:50and if you don't believe me you can get the slightly to induce arts and
0:03:53craft and see that there are identical
0:03:55but again it's the same story that if we take the background the way the
0:03:59illusion comes back
0:04:01this is no way for us know to see
0:04:03this solution i guess maybe if you colourblind i don't think you can see that
0:04:07i want to think about the illusion is a metaphor you know vision is one
0:04:10of the best thing we do we have a huge part of a brain dedicate
0:04:14division bigger than the to get to anything else we do more vision more hours
0:04:18of the day than we do anything else and what follows are designed to do
0:04:21vision and if we have is predictable repeatable mistakes envisioning which was so that
0:04:27what's the chance that we don't make even more mistaken something would not as good
0:04:30or
0:04:31for example financial decision making
0:04:34something we don't have an evolutionary reason to do we don't have a special is
0:04:38part of the brain and we don't do that many hours of the day and
0:04:41the argument is that on those cases it might be the issue that we actually
0:04:45make many more mistakes
0:04:47in worse not have an easy way to see them because in visual illusions we
0:04:51condition we demonstrate the mistakes in cognitive illusion it's much harder to demonstrate the people
0:04:56the mistakes
0:04:57so i want to show some cognitive illusion the decision making lose in the same
0:05:02in the same way
0:05:04and this is one of my favourite plot in social sciences it's from paper by
0:05:09johnson goals teen and it basically shows the percentage of people who indicated that would
0:05:15be interested in giving the organs to the nation
0:05:18and the different countries in europe and you basically c two types of countries
0:05:22countries on the right that seems to be giving a lot
0:05:25and countries on the left it seems to be
0:05:27giving very little
0:05:28not much less
0:05:30that is why the some countries develop in some countries give
0:05:33but it
0:05:34we ask people this question the usually think that it has to be something about
0:05:37culture right how much you care about people
0:05:40giving you organs to somebody else's probably about how much you care about society
0:05:44howling two or maybe "'cause" about religion
0:05:46but if you look at this plot
0:05:48you could see that counts is that we think about this very similar
0:05:52actually exhibit very different behavior
0:05:55for example sweden is all the way on the right and then the market we
0:05:58think is culturally very similar is all the way on the left
0:06:02germany's on the left and austria
0:06:04is on the right
0:06:05the netherlands on the left and belgium is on the right and finally depending on
0:06:10your particular version of the european similar to you can think about the ukraine in
0:06:15french is either similar culturally or not
0:06:19but it turns out that from organ donation directly from
0:06:22but only the middle one is an interesting stories of the netherlands kind of the
0:06:25biggest of the small group
0:06:30turns out to be got to twenty eight percent
0:06:32i the mailing every household in the country a letter begging people to jointly salt
0:06:38intonation proper
0:06:39but you know the expression begging only get two so far
0:06:42twenty eight percent in organ donation
0:06:47but look at the countries on the right to do in the doing a much
0:06:50better job beanbag so what are they doing
0:06:53turns out to see could has to do with the formant the d and v
0:06:56and here's the story the countries on the left
0:06:59how the former that the mv that looks something like this check the box below
0:07:03if you want to participate in the organ donor program
0:07:06in what happens
0:07:07people don't check
0:07:09and they don't john
0:07:10the countries and the right you want to give a lot had a slightly different
0:07:13form
0:07:15uses check the box below if you don't want to participate
0:07:18interestingly enough when people get this data again don't check but now examine
0:07:24the problem
0:07:25no i think about what addition
0:07:29you know we wake up in the morning and we feel we make decisions we
0:07:32wake up in the morning and we open the closet in we feel that we
0:07:35decide what where we open the refrigerator enfolded we decide what to eat
0:07:40in what is actually saying that much of these decisions are not residing would you
0:07:43notice that resigning by the person who's designing that for
0:07:47when you walk into the mv the price of the design deformable have but influence
0:07:52one what you end up doing
0:07:54note also verified to into it is results
0:07:57think about it for yourself how many of you believe that if you want to
0:08:00renew your license to moral and you want to the d m v and you
0:08:04would encounter one of these forms that would actually change one behavior
0:08:08very how to think it will influence aspect we can see all these fun europeans
0:08:12of course it would be influenced number when it comes to ask
0:08:16we have such a feeling that would drive the seat with such as train it
0:08:19will rent control and we are making the decision that it is very high even
0:08:23except the idea that we actually have an illusion of making a decision rather than
0:08:28actual decision
0:08:29no
0:08:30you might say
0:08:32you know the decisions we don't care about in fact by definition these a decision
0:08:36about something that will happen to us that we do how do we care about
0:08:40something less than have something that happens after we die
0:08:43so it's standard economist somebody believing rationality would say you know what the cost of
0:08:48free listing the pencil and marking of the is higher than the possible benefit of
0:08:53the decision so that's why we get this affect
0:08:56in fact
0:08:57it's not because it's easy it's not because it's trivial it's not because we don't
0:09:01care it's the opposite
0:09:03it's because we care it's difficult and its complex
0:09:06and it's a complex it we don't know what to do
0:09:09and because we have no idea what to do we just pick whatever it was
0:09:13chosen for us
0:09:15maybe one more example for this is from a paper by rather might interfere
0:09:19and they said
0:09:20with this effect also happens to experts people will pay experts in the decisions do
0:09:26it a lot and the basically took a group of physicians
0:09:29and they presented in the case study of the patient and the set his the
0:09:33patient is a sixty seven year old former is been suffering from the right a
0:09:37pain for awhile and then they said to the physician yes any decided a few
0:09:41weeks ago that nothing is working for these patient implications nothing seems to be working
0:09:45so you refer the patient to hip replacement therapy
0:09:49"'kay" hip replacement okay so the patient is on the path of happy soup replaced
0:09:54and then sent have a physician the thing yesterday
0:09:57you review the patient's case and you realise and you forgot to try what medication
0:10:00you did not try ibuprofen
0:10:03if you put patient back and try preprocessing module it can go and have hip
0:10:08replaced
0:10:09well the good news is that most physician in this case you started to pull
0:10:13the patient in try ibuprofen
0:10:15very good for the physicians
0:10:17the loop of the physician they said yesterday when you review the case you discover
0:10:21do with communication in trial
0:10:23ibuprofen in pure oxygen this idea to indication each row it what you do you
0:10:28like well you put them back and if you put them directly try i we
0:10:32propose an approach to can which one
0:10:33no i think of with this decision
0:10:36makes it easy to let the patient continue with a hip replacement but telling them
0:10:40but also some becomes more complex
0:10:42this one more decision
0:10:44what happens now
0:10:45majority of the physicians now to select the patient go to get perplexing
0:10:50i don't this war is you by the way
0:10:54when you go to see a physician
0:10:56the thing is that no physician ever say he brought so can i be prof
0:11:00and hip replacement let's go for keep replacing but the model like you said this
0:11:04is the default it has the used car on whatever people and up to
0:11:09maybe a couple of more examples of you rational decision making
0:11:13imagine i give you chose
0:11:15you want to go for we can roll all expenses paid hotel transportation food
0:11:21breakfast a continental breakfast everything
0:11:23or we can in paris now we can in paris we can enrol is a
0:11:27different things they are different for different culture different art
0:11:30noting that i acted the short to the set that nobody wanted
0:11:34but i say that we can enrol
0:11:36we can in paris
0:11:37well having a car stolen
0:11:42it's a funny a because why would having your car stolen in this influence anything
0:11:49but to one option to have your car stolen was not exactly like this
0:11:53what if it was a trip to roll all expenses paid transportation
0:11:57breakfast
0:11:58we conclude coffee in the morning if you will cost you have to pay for
0:12:02yourself it's two euros fifty
0:12:04no in some ways
0:12:06given that you can have run with coffee why would you possibly want run with
0:12:10a coffee it's like having a constellation inferior option
0:12:15but guess what happens
0:12:16the moment to a wrong without coffee run with coffee become more popular
0:12:20in people choose
0:12:22the fact that have role with a coffee make strong we coffee looks superior in
0:12:27not just to run without coffee events appear to paris
0:12:34two examples of this principle
0:12:36this was a natural economist a few years ago
0:12:39that gave us three choices
0:12:41and all that a subscription for fifty nine dollars a print subscription four hundred twenty
0:12:46five
0:12:47or it could get about four hundred twenty five
0:12:52but it is and i called up economist and i tried to figure out what
0:12:55they think
0:12:57and they passed me for one person to another to another
0:12:59a until eventually i got to the first person who's in charge of the website
0:13:04and i call them up and they went to check what was going on in
0:13:07the next thing i know the at his girl and no explanation
0:13:11so i so i decided of the experiment that they don't of the beloved economies
0:13:15to do with me i took this i gave it will have an mit students
0:13:17i said what would you chose a need of them are feature
0:13:21most people want to the comedy or
0:13:23thankfully nobody wanted the dominated option that means of students can read
0:13:29now if you have an option that nobody wants
0:13:32you take it off
0:13:33right so it took like printed another version of this when i eliminated the middle
0:13:37option
0:13:37and i give it another hundred
0:13:39students
0:13:40here's what happens
0:13:41and now the most popular option we cantonese proper and the least popular became the
0:13:45most popular
0:13:47what was happening is that option that was useless
0:13:50in the middle
0:13:52was used as in the sense that nobody wanted
0:13:54but it wasn't uses in a sentence help people figure out what they wanted
0:13:58in fact
0:13:59relative to the option in the middle
0:14:01which was
0:14:03and get only the print four hundred twenty five the print waveform and that means
0:14:07that looks like a fantastic deal
0:14:10in as a consequence people chosen
0:14:12the general idea here by the way that we actually don't know what preferences that
0:14:15well and because we don't know preferences that well what susceptible to all of these
0:14:19influences from the external forces the defaults
0:14:23their particular option that are presented words and so on
0:14:26one more example of this
0:14:27that people believe that when we deal with physical attraction we see somebody and we
0:14:32know immediately what do we like them or not attracted on all this is what
0:14:36we have these phenomena dates and so i decided on these experiment we'd people i'll
0:14:40show you graphic images of people not real people the experiment was would people
0:14:45i showed some people picture of palm
0:14:47and picture of areas and you want to day call
0:14:50jerry
0:14:51but for the people i didn't ugly version of jerry
0:14:54i two for the shop and i major area
0:14:59slightly less attractive
0:15:01the people i didn't come
0:15:04and the question was well as jerry an ugly don't help
0:15:08the respective the more attractive brothers
0:15:11and the answer was absolutely s
0:15:13what ugly jerry was around jerry was popular when only time was around thomas
0:15:19this of course is to a very clear implications for the for life in general
0:15:24if you have a go bar hopping could you want to take what you
0:15:34you want
0:15:35you want this like the audio version of yourself
0:15:39similar but slightly uglier
0:15:43and the second point of course is that if somebody else invites you know how
0:15:47they think about you
0:15:54what is the general point a general point is that when we think about economics
0:15:57we have this beautiful view of human nature
0:16:00what the piece of work is mannheim noble in reason we have these idiots of
0:16:04ourselves of others
0:16:06that the cable economics perspective is slightly less
0:16:10generous to people in fact being medical terms that's the our view
0:16:19but there is a silver lining
0:16:21and the silver lining is i think kind of the reason the behavior economics is
0:16:25interesting and exciting
0:16:27you know how we superman or we homer simpson
0:16:31when it comes to building the physical world and
0:16:34we can understand or limitation
0:16:36so we build steps and we build these things about everybody can use obviously but
0:16:40we build them
0:16:42we understand or limitations and we build around it
0:16:45but for some reason when it comes to the mental world when we design things
0:16:49like health care and requirement in stock market we somehow forget the idea that were
0:16:53limited and i think it's we on this to the cognitive limitations
0:16:57in the same way that we understand of physical limitation examples there was in the
0:17:00face in the same way we could design a better world and that i think
0:17:04is the hope of these things