Because of a recommendation from Quora, I have just belatedly started a Behavioral Economics class on Coursera called “A Beginner’s Guide to Irrational Behavior.” Right up my alley. I’ve already written down some interesting points and I’m only 20 minutes in.
- Humans have difficulty with the Planning Fallacy. These dopes consistently underestimate how long a task will take, even when they are extremely experienced in that task. These mistakes only happen when you evaluate yourself, and not if you are an unrelated observer–in that case, you over-estimate. Selfish, counterproductive optimism.
- We may have good intentions, plenty of experience, and strong intuitions but we can still be wrong. The fundamental principle of irrationality is that we think we know the right thing to do, but we are wrong.
- We do not see with our eyes, we see with our brains. Our brains incorporate our expectations into our perceptions, which is why optical illusions work. Though our brains are very strong and very good at vision, we still make predictable, systematic errors. We are evolved to be good at eyesight, and yet that is still the case. Consider other skills that we aren’t evolutionarily optimized to do (investing money, for example), and it becomes clear that we will make predictable, systematic errors in those areas too.
It’s really good shit. I’ll keep at it.