How do smart people make smart decisions? | Gerd Gigerenzer | TEDxNorrköping
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- čas přidán 25. 01. 2017
- Gerd Gigerenzer is Director at the Max Planck Institute for Human Development and Director of the Harding Center for Risk Literacy in Berlin. He is former Professor of Psychology at the University of Chicago and John M. Olin Distinguished Visiting Professor, School of Law at the University of Virginia. He is also Batten Fellow at the Darden Business School, University of Virginia, and Fellow of the Berlin-Brandenburg Academy of Sciences and the German Academy of Sciences. Awards for his work include the AAAS Prize for the best article in the behavioral sciences and the Association of American Publishers Prize for the best book in the social and behavioral sciences.
This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at ted.com/tedx
complex problems don't need complex solutions! that's great!
Sean Li That's why guns were invented.
I came here to comment the same
Although I had never heard of Gerd Gigerenzer until I stumbled across this TEDx Talk of his, his remedies for increasing the reality of clarity in decisions and making successful (with good outcomes) decisions was invaluably comforting to me!
Read his book. Brilliant stuff.
Amazing video, amazing introduction to this subject. I really loved this talk. Thank you Mr. Gigerenzer!
Excellent. Thanks, prof. Gigerenzer.
what a nice person and perfect wisdom!
A German who knows about Cricket! Great talk 👏
simply a brilliant speaker!!!
Lukas, vom Entscheidungs-Seminar, ist ein guter Mann
Thank you Sir
Just wonderful explanation.
Well explained.... Thanks...
Thank you
15:05 ...i knew it was you steve carell laughing sarcastically 😆
If you end up regretting your choice of partner after marriage, probably the other person thinks the same way. If you are smart, insightful and experienced enough with people, you'll know which traits visible in the present will predict their lifelong behaviour and attitude. For me knowing a little psychology and the big five traits helped me predict even their probability of achieving success in their lifetime with only little mistakes.
A lot people act differently before and after marriage,,,
So nice...
From my perspective decision must be made based on highly of users utility as individual,organization,family etc... without broken the static fundamentals .
So insightful
I like how he make me to really think about how to make a fairly good decision, and not just to follow an advice
Just paying attention can do a lot. For an example you won't become a master woodsman and tracker by doing calculations, you'll become that by spending a lot of time in the woods an paying attention. Eventually you will start to recognize the tracks of people and animals.
Wow. Just wow 👏🏽
So, tip to people, if you want to learn to think before you act and strengthen calculating decisions to trust which decision has the biggest chance of reward then install one or several strategy games on your device. My intuition, decision making, and patience and calculating probability comes from strategy games. If you play an opponent (chess, checkers, Othello, 4 in a row, go or many others) you have to figure out what moves they can do based on your move. My grandfather and father could predict 5 moves ahead because they saw which options was best for each situation after a piece was laid. This prediction skill out of it has given me the ability to look at a problem subjectively. All decisions has a strategy whether it's a gut feeling or outweigh good and bad.
Smart comment. Learning games like chess early in life can help you make wise decisions in the future.
Locutus D'Borg thank you, much appreciated! :)
Good luck to you, sir. I deeply appreciate thoughtful, well-written posts. They are rare. I hope we meet again on these various YT threads.
Locutus D'Borg Likewise, I am hoping to maybe invoke more younger people to dare to speak from the mind and heart and not just from the mouth. :) Leading by example is the best way to be uplifting in my opinion! I hope to see you around!
I really appreciate your very useful comment ... thanks for taking some time out to write it ... I love to follow you CZcams because I like wise people who are giver
Awesome thoughts
wow...now i have a new thing to study...blessings to all
wish I knew this when I was young.
Simply brilliant!
Thank you sir 👏👏👏👏🤍
Master class for decision making ..
Very good speech! More, but more complex about that- Nassim Nicholas Taleb.
Moral of the story, always put a stop loss.
Thanks
Great.
Thank you all very much
Strong believer of Markov theory of statistics aka Markov property. Great talk
Superb
He is a very underrated figure.
woah...this is a good one
Yes sir!
this guy nails it
It's a nice and well informationed lecture, I like it. Yesterday I turned down a job offer that I was almost consider to work , because I thought too much with too many informations and concerns. Now I feel I had a wrong decision. Now I am thinking whether I should ask them again....
😂😂😂😂
you are a great speaker
Excellent lecture 👍👏👏👏👏
Great
Does some have the flying ball trajectory formula?
Excellent talk, but I have a feeling it could be misinterpreted a little, by some loss in translation. It would be clearer if when he describes the “risk” category he referred to it as something like “The Set of All Known Risks”. I wonder if that is implied in the German word for risk.
I did not understand what is the difference between uncertainty and risk. Could someone help?
good video..
Nice.
This is extremely interesting and intellectual explanation
This guy is right, I am sure of that.
❤️❤️❤️
Hello Philly!
Where can i download the powerpoint ?
Wow
Clear language
15:07 the shock he got from the guy's laughter
I did not understand what is the difference between uncertainty and risk
His friend was quite the stud if he had a bunch of women he could rate and then pick one and she said yes to his marriage proposal. In reality at most one would have two to choose from. And its usually just one that you first make a choice to date because you like her and she is the only one you are seeing. Lets face it dating several women at once is expensive, time consuming and very impractical if you have to work and pay bills etc.
u r so beta ;P
Great observation!, probably if you were Hugh Hefner or a character like that.... and you wanted to get married you could do such a thing.
Hahaha..
I did not expect to see a rational argument for monogamy on this video.
What if heuristics is just prior calculations that are carved into our LTP* mechanism?
I mean, maybe our decision making is calculating-by-proxy, if we encounter new problems, based on prior events and experiences? A little bit of both.
* = LTP = long term potentiation,
A neural process that makes neurons more likely to fire one-another if the stimulation is done more times.
Exactly. Heuristics are just the product of expected utility based on experience or knowledge. The calculation is done beforehand. There is no need to do the same calculation twice - Under the exact same situation, doing the same act will yield the same result. Athletes memorize the scenarios and actions they have to take (with their body) so that they can react immediately on the field without calculating. That is called practice. Just like how they experiment with different strategies *beforehand*.
there is no exact same situation. I think you define expected utility different than the Prof.
You define expected utility as the best possible outcome he refers to the model where you calculate it mathematically with probalitities. If you define it that way sure everything is expected utility.
I dont see that there is a contradiction with experience or knowledge. I think its totally logical that easy decision methods that work are selected when the outcome is hard to predict.
I also suspect for you is everything a calculation when you say they just calculate beforehand. Sure when you see it that way even an association is a calculation like leaves are falling = winter is coming. I dont think Athelts calculate expected utility all the time they learn and learning and the brain is based on rules how the world works. If you learn strategies and tactics how does that contrdict heuristics?
A bit of both. Generative thinking begins with 'picking' items within long-term memory...The automatic impressions that one gets when thinking/solving problems is critical to the information they will access.
Problem with Markowitz model is that it assumes variance to be a good measure of risk and correlations between assets to be constant and linear. According to the Central Limit Theorem we could say that with enough data the model can be used. But the CLT does not apply in financial markets.
Notice that the 1/N heuristic is not better, it happened to be better !!! Furthermore, the development of the Markowitz model (CAPM) offered the advantage to tweak the "risk" exposure according to the investor's aversion. Finally, the two approaches share a similar feature: they propose to invest in all the assets.
Whatever here the problem is not that the theoretical model will be beaten by the heuristic, but that this model is not and will never be suited for asset allocation.
The very important lesson is that this case does not demonstrate that complex approaches are worse than heuristics. Actually, if the complex approach is not fundamentally wrong and that we can use it (the baseball player cannot obviously) then it will perform better than the heuristics.
This video is too short and it teaches only 1 lesson: calculate with known risks but use heuristic with uncertainty. This is very interesting and good to know.
But the next question everyone asking is: how do you recognize a good heuristic from a bad heuristic? Please teach us that. We need to know. I think here the lesson is not so simple (maybe one doesn't exist).
Look at the marriage case for example, now only a math nerd will be sitting around doing all of those silly calculations. Everyone else is using one heuristic or another. Such as: don't marry a single mother, those without a college degree, too much tattoo or a tramp stamp, body piercing, without a job, etc...
Ok, so everyone is using a different heuristic with a totally different outcome. How do you know which is best for you?
The real title of this talk is: Simple heuristics that make us smart only if we know what they are among the ocean of useless heuristics.
So, you treat marriage the way you solve a formula. That's the problem.
well said!
Yeah man....this video had great potential and a lot of expectations around it. I feel most of the TEDx videos are not titled appropriately, hyped up whereas they should be accurate. I felt that this video showed me doors to more knowledge but I expected the knowledge to be shared here because of the damn title.
Common sense, baby. Skin in the game. Evolution is filtering. We have heuristics that were selected for - we shouldn't not use them in favour of fancy "models" that don't deal with uncertainty.
Read Taleb.
"How to recognize a good heuristic from a bad heuristic?"
Heuristics are not good vs. bad. They are survival vs. extinction.
Heuristics are passed on because the people using them survived.
The heuristic of driving with ones eyes closed was not passed on.
I'm wondering how many parents would want to text their own that way. What kind of parent would and how they would proceed if the little one ate the marshmallow. It's not like they'll ever forget it. One can't unring a bell after all.
Thank you for your wise words.
Could any one please help and put one peace formaition i could use that is a responsibility we should know. I would be grateful for your time. Thank you
But what about Bayesian statistics? Is it wrong then?
it is about certain and uncertain environments, and what to use to make better decisions, work it out which to use to solve your Bayesian stats problem
i think it's just not as good as heuristics because they are intuitive and thus much closer to reality
After 17:59 he turned into Ross Geller!
W r t the beginning the probabilities were wrongly calculated in that person's marriage . Anybody getting married has to be irrational
Dharmendra Rai
Tax benefits with no change to your personal life(s) and limitations for your legal interdependence?
Having children is also irrational. Irrational goals are done based on intuition by focusing on one positive aspect...keep your eye only on that positive reason and you'll be happily married with children.
Then in a divorce all the pennies saved in tax dont matter
men who hate marriage just want to live a life unencumbered of any responsibilities towards another human being. This is also why the number of abortions skyrocketed in recent years. Women can't trust these losers to stand up for their own flesh and blood. All in favour of some childish game these men are playing... such losers.
@@e.v.6389 One thing good about having kids is you get a discount on taxes xD
🕊
Following....
5:48
11:50
I think this is called the "bounded rationality" model. Using heuristics instead of calculation.
I remember applying this guy's "Fast and frugal" heuristic to a problem of "Who is most likely to win the election". The heuristic I used got the answer right 50% of the time (i.e. no better than random guess). A more mathematical model got it right 80% of the time. The only difference is that the fast and frugal heuristic stops at first attribute where you can determine the "winning" alternative (other model assigns a point and sums them up). So even though it's not explicitly stated, the heuristic forces you to choose the order of attributes from most influential to least influential which is in direct contradiction to this model of bounded rationality to begin with! Because the point of this heuristic is to determine who will win when you _don't_ know enough variables to apply a more mathematical model! If I don't know enough, how can I rank the attributes in the correct order? By that heuristic Sanders was supposed to win both in 2016 and in 2020.
If you treat this as a descriptive decision behaviour model, it does work. Many people's brains work exactly like this. But saying that this is a good prescriptive model (at least in most cases - because he is trying to convince the audience that you rarely have enough data for calculations) is, in my opinion, misleading. If for no other reason then because I can't imagine a heuristic that does not force the DM to make an assumption that requires more variables than the heuristic is trying to avoid. In the ball catching example that decision is knowing exactly what is the single variable of most influence that lets them ignore others. If wind is strong the heuristic won't work => need to know wind speed. Same with the plane => if landscape is not flat, need to know the relief. Professional players or pilots will know these things. You, given the same situation, will not.
My point is - the design of a heuristic is in itself a contradiction. In having to throw away variables in favor of the most obvious, you are making a decision that requires knowledge of all the variables you are ignoring, which may be a near-infinite amount. For prescriptive analysis, it's better to pick the few variables you _do_ know something about and combine them, instead of trying to single out the best one to represent the entire hypothesis space.
Absolutely agree. This is rather pseudoscientific.
how you know your intuition?
5:00
How to make good decisions
Look before you leap
Analyse before you act
The method of listing pros and cons and then weighing and adding.
Listed all the alternatives, all the consequences.
This method works in the world of risk. U can calculate how much you will lose.
But not all things can be calculated. Choices between two partners or jobs.
Complex problems don’t need complex solutions. (Uncertainty)
How do real players catch balls? Trajectory calculation. Runs, angle of gaze in line with the ball. Intuition. The person knows what to do but doesn’t know why.
The Hudson River landing. Done the same way. Heuristically.
Financial crisis happened coz uncertainty principles were applied to the world of risk. (Where value calculation etc is applied)
Prediction uncertainty- large
Options- more
Learning sample- small
Prediction is hard.
People trust their doctor. If they have evidence, no conflict of interest and don’t do defensive decision making.
Intuition not good for the world of risk.
Thank you so much!!
Summary: Keep It Simple Smartypants.
😂
Smart people also make smarter health choices, which makes smart people live longer
Einstein's back! Knew we'd unlock the key to resurrection
Occam’s razor
It's sad to base situational behavior where the best odds are 50/50 no matter how you slice it.
Can someone please summarize this for me, I mean how should we make sound decisions...
Well, Google can made me CEO because I don't even know the complex maths, so, by instinct I'm a simple heuristic type person. 🤩
Can anyone kind of sum up the major takeaways from this talk? I’m really lost on the message here 🤦🏼♂️
Firstly, you have to decide if you take his words or not. And your decision might not be a smart one.
"Complex problems do not require complex solutions", goes directly against cognitive-load theory. If in real time , very fast calculations, can converge onto some useful answer, when cognitive load is useless, than applying analytical thinking (IQ) is not necessarily the best option. Furthermore, the answer may come after you rationalize what is based on you intuitive/heuristic processes. This means the answers to some great problems are trapped across time, and may only be solvable by some interaction of System 1/System 2 thinking. Obviously not all processing is linear - Thanks for calling out IQ as pseudo-science as Gigerenzer!
The gazelle is trying to 'break' the cheetah's "falling object" expectation and be identified as a distraction (object 'shot across' the expected trajectory) instead of la lunch -? Thereby hangs the tail...
That marriage example is meaningless. He calculated a PROBABILITY. It's like rolling a dice with 70% chance to win instead of one with 40% chance to win. You can still lose in either case so the fact that he got divorced is irrelevant to this case.
Omg... There are so many flaws in his argument. Providing an outlier does not prove that the opposite is true. It simply proves that the current theory is not ALWAYS true.
He failed to understand a bad outcome does not necessarily mean bad strategy. A good decision still may lead to a bad outcome. Just like a winning team might not always have the better strategy and the losing team might not always have the worse strategy.
The heuristics he provided have to be created in the first place. How do these "good intuitions", "heuristics", and "rule of thumbs" came about? It came from people who have already experienced it. It means *many attempts* have been made and these experienced people realize that certain actions are *likely* to yield this *expected utility*. Thus, the rule of thumb.
He also failed to realize that athletes do not mostly react on the field. They train with their teams, experiment different strategies and practice certain moves under specific situations again and again. Thousands of times. This is to instill a habit in them so that they can immediately react on the field without calculating. The calculation for deciding what habit/actions to instill has *already been done* and experimented with. That is what a coach is for.
Expected utility is NOT mutually exclusive. It is the foundation of good decision making. There is no flaw in that theory. The flaw comes from human in its application. We are bad at predicting probabilities and the utility of certain outcomes. It is not easy to make these predictions. Thus, we try to learn from *experienced people*. Because experienced people have better estimations on what is the probability and utility of certain actions than *inexperienced* people. You would never want to follow the heuristics of someone who has failed consistently or does not have any experience in the subject.
The only way we can make good use of the expected utility approach is to understand the situation and widen our knowledge in order to make better predictions. We *have* to take into account of emotions. Just like marriage, I marry her because of the emotion that is already attached to her. And, I did not say it is easy to be self-aware and to understand and weigh your own emotions.
Zack interesting. I get your points but how do you evaluate good and bad strategies? In the process, you must must choose a theory says “we can value a strategy by how complexed they are”. through the anecdotal evidence in the lecture, we learn that this theory is not true. And so, again, what other theory do you use to evaluate a strategy?
I mean, the point made by the speaker is that the evaluation metrics must change depending on the situation.
Secondly, the most experienced practitioners are also not good in the financial sector either. Overwhelming evidences show that over 90% of financial advisors lose to the market.
Zack Any books you recommend on decision making?
well said
Grupul Speranta
That man's laugh was the reason thanos wanted to wipe half of humanity.
It was a 'gaggle' of 'Canada' geese, not 'Canadian' geese. lol, I think they were Mexican Canada geese.;)
The rubbing sound is totally annoying. FFS
To baldly go where no man has gone before.....
Too bad this vid doesn't ACTUALLY teach anything...I just learned that I need to study "heuristics" (whatever that may be) to learn how to apply decision making in a world of uncertainty (whatever that world may mean)
r a I did actually google stuff from this vid and guess what. I didn't find what I was looking for. Most likely, this knowledge that the vid is talking about needs to be "purchased" with money or you need to be part of that school, which I won't be able to. Or maybe I didn't search hard enough for free stuff...
Video contains very useful thoughts. And if it prompted you to learn more about it, instead of being spoon-fed. I'd say that's a win.
Ray D I think heuristics that the lecture refers to belongs to the field of psychology because obviously, the speaker is a behavioral scientist. The best place to look for the meaning of “heuristics” is a paper on Prospect theory by Amus Tversky and Daniel Kahneman. Also, you can read “thinking fast and slow”. Have fun
Well it is only ~20 min video. It's supposed to ignite an interest.
Too bad you did not understand anything ...
has anyone shown this lecture to Donald Trump?
I love the fact someone was sleeping and snoring through this...good talk though, smart.
Yes, who should i marry? I need to know by tomorrow
Next time, interupt & sort his microphone out! To a sound tech this is unlistenable ;)
firstttttttttttttttttttttttt
Far too complicated! It's called TEDx Talk, not TEDx Science!
Ted talks are way too lengthy... you cannot go through a conclusion so soon... and even in some of the talks they keep on talking but it is not related even to the topic...
Great speaker, but bad theory. I put thumbs up, but I didn't like the lecture as a whole. Human brain does daily more calculations that the concision thought - it analyses data from trillions of sensors and filters out what is not needed based on past experience. What we call "intuition" is our subconscious thought that is smarter (in my opinion). Eg. when you are going to work your "intuition" knows based on past experience if you are going to be late or not, but your conscious mind suppresses that smart calculation with a different rational -you think you will arrive in 15 minutes, because of that one time when you did, regardless of the experience that every time it takes you 20. The result is a sum of both. Football player is calculating the trajectory of the ball subconsciously without knowing it and that "computer" has been "programed" and "tuned" correctly during many past training exercises. Using "simple" method will not help him catch the ball if he hasn't trained for it many times... so the "simple" is never simple...
Phillip White But that doesn't explain why people reliably act irrational in specific situations. A heuristic which usually works but doesn't in the specific situation explains it. Also, heuristics explain why there are hard decisions. If only calculated expected utility we would simply throw a coin. But we don't, presumably because we don't have some appropriate heuristics for that problem.
Phillip, you are correct, and that was the point Dawkins made in his book. We evolved to calculate subconsciously, and what appears simple is the product of many thousands of years of evolution.
Well he did say they are continuously researching to figure the whole thing out, trying to look for patterns here. The whole reality is way to complex to be able to figure out the whole thing so quickly. And btw, I never had any formal training in Cricket and was still able to catch the ball with his technique never even realizing that that was a techinque. All intuition. So there are patterns after all.
To the extend that I know, he knows little about Finance.
One Cannot Prove something Just by using some deliberately selected Stories.
DO Not Trust in What You Don't Understand.
Is Keynes knowledgeable enough about finance? His whole theory relies on that distinction between risk and uncertainty
@@armobenj do you know the difference between risk and uncertainty? I did not get it
@@natywvela6668 The distinction comes from Knight's description: Risk refers to unknown outcomes with known probabilistic occurrences. In case of uncertainty, there is no meaningful probability distribution for those unknown outcomes. In case of true uncertainty you cannot say things like there's 50% chance that something will happen. Keynes recognizes this: not everything but many future outcomes are fundamentally uncertain. Most models in finance presumes the future can be measured as risk but that's not a realistic assumption.
You ever notice broke person acts like they know everything and won't listen to any advice from those that have income? But are glad to take their money?