WEBVTT - Malcolm Gladwell's 12 Rules for Life 0:00:15.356 --> 0:00:15.796 Pushkin. 0:00:20.636 --> 0:00:24.116 So one thing that chapter one is about is the 0:00:24.116 --> 0:00:27.876 fact that if a lobster is defeated in a dominance battle, 0:00:28.516 --> 0:00:32.036 you can give it essentially antidepressants, and it will fight again. 0:00:34.036 --> 0:00:39.556 There's a Canadian like me, my age, almost exactly, who 0:00:39.596 --> 0:00:43.356 teaches my favorite subject, psychology at my alma mater, the 0:00:43.436 --> 0:00:46.556 University of Toronto. His name is Jordan Peterson. 0:00:50.036 --> 0:00:52.316 If you want to understand a complex nervous system, it's 0:00:52.316 --> 0:00:55.196 a good idea to understand a simple one first and 0:00:55.236 --> 0:00:57.516 then sort of elaborate upwards. And it turns out that 0:00:57.996 --> 0:01:02.956 seratonin governs status, emotional regulation, and posture in lobsters just 0:01:02.996 --> 0:01:04.996 like it does in human beings, and so that would 0:01:04.996 --> 0:01:06.636 just blew me away. 0:01:07.436 --> 0:01:10.676 He wrote a very provocative self help book called Twelve 0:01:10.836 --> 0:01:15.276 Rules for Life. Rule number one stand up straight with 0:01:15.316 --> 0:01:19.676 your shoulders back. Rule number two treat yourself like someone 0:01:19.756 --> 0:01:23.516 you are responsible for helping. Rule number twelve, pat a 0:01:23.636 --> 0:01:28.836 cat when you encounter one on the street. Peterson's book 0:01:28.876 --> 0:01:31.516 was a sensation, and soon all kinds of other people 0:01:31.556 --> 0:01:35.156 were doing twelve rules, like the economist Tyler Cowen, whose 0:01:35.156 --> 0:01:38.036 blog Marginal Revolution is the first thing I read every morning. 0:01:38.796 --> 0:01:42.676 I particularly like Cowen's rule number seven, learn how to 0:01:42.836 --> 0:01:46.836 learn from those who offend you every time you turn 0:01:46.876 --> 0:01:51.516 a corner. Twelve rules the columnist Megan McCardell rule number three. 0:01:52.356 --> 0:01:57.076 Always order one extra dish at a restaurant, an unfamiliar one. 0:01:57.156 --> 0:01:59.716 You might like it, which would be splendid. If you 0:01:59.756 --> 0:02:02.836 don't like it, all you lost was a couple of bucks. 0:02:03.796 --> 0:02:09.116 The exercise of curiosity requires a risk, a sacrifice, a commitment. 0:02:09.596 --> 0:02:16.676 I love that. Also, mccardle's rule number twelve. Always make 0:02:16.756 --> 0:02:19.556 more dinner rolls than you think you can eat. For 0:02:19.596 --> 0:02:23.076 some reason, dinner rolls loom much larger in our imaginations 0:02:23.396 --> 0:02:28.476 than in our stomachs. Whoa Megan mccardal makes her own 0:02:28.476 --> 0:02:39.516 dinner rolls. Everybody's doing twelve rules. Wait, I'm jealous. My 0:02:39.596 --> 0:02:42.556 name is Malcolm Gladwell. You're listening to Revisionist History, my 0:02:42.636 --> 0:02:47.316 podcast about things overlooked and misunderstood. This episode is about 0:02:47.596 --> 0:02:51.596 Malcolm Gladwell's twelve Rules for a Living, my guiding principles. 0:02:51.996 --> 0:02:58.356 My wisdom distilled. EXCEPT thought about this for like a month, 0:02:58.476 --> 0:03:01.676 and I realized I don't have twelve rules. I just don't. 0:03:02.196 --> 0:03:05.236 I mean, I have rules like the fact that I 0:03:05.276 --> 0:03:10.796 only drink five liquids ever, water, tea, red wine, espresso, 0:03:10.836 --> 0:03:13.596 and milk in some combination. But that's not a rule 0:03:13.636 --> 0:03:17.556 for living. It's just pointlessly provocative. Self denial the least 0:03:17.556 --> 0:03:20.556 attractive part of my personality. If you want a cocktail, 0:03:20.676 --> 0:03:23.756 you should have a cocktail. I only have one rule, 0:03:24.796 --> 0:03:28.556 pull the goalie. 0:03:32.516 --> 0:03:35.316 What do you mean when you say you're obnoxious? Ah 0:03:35.396 --> 0:03:36.236 the most specific. 0:03:37.396 --> 0:03:41.436 If I found something funny which is still a disease 0:03:41.516 --> 0:03:46.516 I have, I will say it, even if it's gets 0:03:46.516 --> 0:03:48.596 me in some trouble. I never thought I was particularly cruel, 0:03:49.516 --> 0:03:50.716 but I was a class cut up. 0:03:51.516 --> 0:03:53.716 My one rule for living came to me from the 0:03:53.756 --> 0:03:57.516 work of two people, Cliff Assness and Aaron Brown, both 0:03:57.556 --> 0:04:01.796 philosophers of a sort and friends. This is Clifford Assnes. 0:04:02.076 --> 0:04:05.276 He's in his mid fifties, bald Goate grew up middle class, 0:04:05.316 --> 0:04:06.636 Jewish and Long Island. 0:04:06.836 --> 0:04:08.716 I was in the honors classes, and I was the 0:04:08.756 --> 0:04:10.716 cut up in the honors class. Whi's always a strange 0:04:10.716 --> 0:04:12.876 thing to be. You don't think of those classes as 0:04:12.876 --> 0:04:13.316 having one. 0:04:13.316 --> 0:04:13.916 But we had him. 0:04:14.636 --> 0:04:18.156 Wasn't always me too. We were not perfectly well behaved, 0:04:18.556 --> 0:04:23.796 so obnoxious. I was tolerable, but I found myself extremely funny. 0:04:24.676 --> 0:04:27.916 Now I should say that I didn't find Cliff Astness obnoxious, 0:04:28.196 --> 0:04:32.676 he's delightful company. Instead, I suspect he is what psychologists 0:04:32.756 --> 0:04:41.076 call disagreeable short digression. Psychologists believe that human personality can 0:04:41.116 --> 0:04:48.156 be assessed along five dimensions extraversion, conscientiousness, neuroticism, openness to experience, 0:04:48.436 --> 0:04:54.156 and finally agreeableness. My sense of Cliff Astness, he's at 0:04:54.196 --> 0:04:57.516 the low end of that last trait number five. He's 0:04:57.636 --> 0:05:01.556 low agreeable disagreeable, which is not the same as obnoxious. 0:05:01.676 --> 0:05:04.636 It's rather the quality of not being depended on or 0:05:04.676 --> 0:05:10.116 particularly interested in the approval of others. When I went 0:05:10.156 --> 0:05:13.156 to interview Cliff Astness in Manhattan, I turned on my 0:05:13.236 --> 0:05:16.956 digital recorder and discovered that my memory flash guard was full, 0:05:17.676 --> 0:05:20.876 And after much fluster and fumbling, I realized I had 0:05:20.876 --> 0:05:23.436 no idea how to delete any of the existing data 0:05:23.436 --> 0:05:26.996 from the flashguard to make room for my interview with Asnes. Now, 0:05:27.036 --> 0:05:29.636 the rational thing would have been for me to hand 0:05:29.756 --> 0:05:33.276 Asness the digital recorder and ask him to figure it out. 0:05:33.836 --> 0:05:36.436 Because Cliff Astness has an IQ I'm guessing two to 0:05:36.516 --> 0:05:40.076 three standard deviations higher than mine. He could have solved 0:05:40.116 --> 0:05:43.876 the problem in about thirty seconds, but I didn't hand 0:05:43.916 --> 0:05:47.396 on the recorder because I was embarrassed, because I worried 0:05:47.436 --> 0:05:50.036 that he would think I was pathetic and that concern 0:05:50.396 --> 0:05:52.796 was more important to me than actually fixing my tape 0:05:52.796 --> 0:05:57.356 recorder issues. I am agreeable, I am interested in the 0:05:57.356 --> 0:06:00.716 approval of others. I am the opposite of cliff Astness. 0:06:01.316 --> 0:06:04.196 So I ended up running down forty second Street, two 0:06:04.236 --> 0:06:07.596 cross down blocks to Staples to get another flashguard to 0:06:07.676 --> 0:06:10.076 replace the one. I was too embarrassed to ask for 0:06:10.116 --> 0:06:11.196 help figuring. 0:06:10.796 --> 0:06:17.636 Out here you may include this is this is. This 0:06:17.676 --> 0:06:19.796 is not a secret. I don't work as hard as 0:06:19.836 --> 0:06:22.676 people think. I goof off a lot. 0:06:22.996 --> 0:06:28.316 Cliff Astness likes puzzles, games, problems that engage the imagination. 0:06:28.876 --> 0:06:32.436 I have been caught several times playing internet chess in 0:06:32.476 --> 0:06:35.196 my office from people, and I say, caught. I'm the 0:06:35.236 --> 0:06:36.836 senior guy at the firm. I don't, I don't, I 0:06:36.876 --> 0:06:39.476 don't quit over this. But people come in and I'm like, yeah, 0:06:39.476 --> 0:06:41.636 I gotta beat this guy, hold on more or lose. 0:06:41.676 --> 0:06:42.796 I'm not a great chess player. 0:06:43.276 --> 0:06:46.836 He doesn't play conventional chess. He plays one minute chess, 0:06:47.316 --> 0:06:50.196 known as bullet chess. If you're curious, this is what 0:06:50.276 --> 0:07:00.836 a typical bullet match sounds like. It's like Einstein playing 0:07:00.876 --> 0:07:05.116 ping pong. By the way, when Astnes says I'm the 0:07:05.196 --> 0:07:07.796 senior guy at the firm, he's referring to the fact 0:07:07.916 --> 0:07:11.436 that he heads a company called aq R Capital Applied 0:07:11.636 --> 0:07:15.196 Quantitative Research, a hedge fund with two hundred and twenty 0:07:15.236 --> 0:07:20.276 five billion dollars under management, which brings me to philosopher 0:07:20.356 --> 0:07:25.756 number two, the second architect of the Pologuli principle, Cliff Astnes' 0:07:25.916 --> 0:07:30.436 friend Aaron Brown. If we were to create a disagreeableness 0:07:30.476 --> 0:07:33.836 scale where zero is like a golden retriever and ten 0:07:33.956 --> 0:07:36.996 is mister Spock, Cliff Astness would be a solid seven. 0:07:37.516 --> 0:07:40.556 Aaron Brown is an eight, maybe even an eight point five. 0:07:44.876 --> 0:07:47.716 Brown is a member of the tribe of mathematically minded 0:07:47.796 --> 0:07:51.236 finance guys known as quants. The Wall Street Quants used 0:07:51.276 --> 0:07:53.916 to gather after work at the Odeon Restaurant in downtown 0:07:53.956 --> 0:07:57.516 Manhattan to talk about Gaussian probability in the bond market. 0:07:59.716 --> 0:08:02.516 Yeah, so there's different definitions of quant. So remember quant 0:08:02.556 --> 0:08:06.116 is an insult invented in the mid nineties that became 0:08:06.156 --> 0:08:09.556 adopted as a point of pride. 0:08:09.676 --> 0:08:13.836 Aaron Brown is a big guy beard, impassive demeanor. When 0:08:13.876 --> 0:08:16.116 I met him, I was reminded of my favorite joke 0:08:16.116 --> 0:08:19.916 about engineers. The optimist sees the glasses half full. The 0:08:19.956 --> 0:08:23.996 pessimist sees the glass as half empty. The engineer wonders 0:08:23.996 --> 0:08:25.876 why the glass is twice as large as it needs 0:08:25.916 --> 0:08:30.476 to be. Brown grew up in Seattle. His mom had 0:08:30.476 --> 0:08:33.876 a master's in chemistry. His dad had a PhD in physics. 0:08:34.396 --> 0:08:37.316 Did a lot of unconventional work for the Air Force, 0:08:37.676 --> 0:08:40.476 like the time he inherited a strange contraption. 0:08:41.636 --> 0:08:43.436 The Air Force had even this guy like two million 0:08:43.476 --> 0:08:46.436 dollars over ten years to build some machine, and they 0:08:46.436 --> 0:08:47.956 didn't know what it was supposed to do, but they 0:08:48.036 --> 0:08:50.956 know he was really smart. And then he killed himself, 0:08:51.596 --> 0:08:53.356 and so the Air Force said, is there anybody who 0:08:53.356 --> 0:08:55.036 wants this machine? You can figure out what it does 0:08:55.076 --> 0:08:56.876 and fix it him. My dad said, chure, I'll take it, 0:08:56.916 --> 0:08:58.236 and he had in our base learn. 0:08:59.796 --> 0:09:03.516 A tortured genius builds a sinister contraption with millions of 0:09:03.516 --> 0:09:07.676 dollars of secret Pentagon money. The man mysteriously commits suicide. 0:09:07.796 --> 0:09:11.996 The Air Force says, who wants the machine? Aaron Brown's 0:09:12.116 --> 0:09:15.036 dad says, over here, over here. He puts it in 0:09:15.116 --> 0:09:18.036 his basement and says to his teenage son, Aaron, Hey, 0:09:18.556 --> 0:09:20.396 take a look if you want, Like it's a box 0:09:20.436 --> 0:09:25.796 of legos. This is how you raise a child to 0:09:25.836 --> 0:09:26.756 be an eight point five? 0:09:27.596 --> 0:09:28.596 What was the machine? 0:09:28.996 --> 0:09:31.396 It was just this huge fish. I stared at that 0:09:31.436 --> 0:09:34.316 thing for hours and hours. I couldn't have tubes and 0:09:34.396 --> 0:09:37.716 wires and this and that. And he turned it on 0:09:37.836 --> 0:09:39.196 and it did kind of you know, lights would light 0:09:39.236 --> 0:09:41.076 up and do interesting things. But we never figured out 0:09:41.076 --> 0:09:43.236 what it was intended to do. His note his notes 0:09:43.276 --> 0:09:46.956 were indecipherable, and he burned some of them. So either 0:09:47.076 --> 0:09:50.716 he was the guy who invented like the Universal Wonder 0:09:50.796 --> 0:09:54.196 Machine and whatever, or he was just some crazy guy 0:09:54.196 --> 0:09:55.556 who liked quit wires together. 0:09:55.796 --> 0:09:58.316 It was the thing from that movie from Back to 0:09:58.356 --> 0:10:00.436 the Future, the flat the flux capacitor. 0:10:00.556 --> 0:10:05.036 Yeah, yeah, maybe he didn't. Maybe he teleported himself to 0:10:05.596 --> 0:10:07.356 some other civilization or something. 0:10:09.116 --> 0:10:11.716 When Aaron Brown was a teenager, Seattle was in the 0:10:11.716 --> 0:10:14.636 midst of a deep recession. All around him, people are 0:10:14.676 --> 0:10:18.156 losing their jobs. He decides he needs a marketable skill. 0:10:18.716 --> 0:10:21.636 He teaches himself poker and finds a big money game 0:10:21.676 --> 0:10:23.116 in the basement of a local tavern. 0:10:23.556 --> 0:10:27.356 And I figured out two really important things. I was 0:10:27.476 --> 0:10:31.036 much better than these guys. I could easily win money consistently, 0:10:32.196 --> 0:10:33.676 and they let me win it and walk out with it. 0:10:34.116 --> 0:10:37.396 You know, a kid comes in plays, walks out. So 0:10:37.516 --> 0:10:39.836 that's like epiphany for me that says, okay. 0:10:39.756 --> 0:10:40.316 You're how old? 0:10:40.716 --> 0:10:44.196 Fourteen? But I was a shy kid. This took every 0:10:44.236 --> 0:10:46.716 ounce of courage I possessed a walk in there. You know, 0:10:46.756 --> 0:10:47.956 there are people who could have done this and it 0:10:47.956 --> 0:10:49.396 wouldn't have been a big deal. But for me, it 0:10:49.516 --> 0:10:52.236 was like the most traumatic event in my life. But 0:10:52.316 --> 0:10:54.196 when I walked down, I said, Okay, I never have 0:10:54.236 --> 0:10:56.316 to worry about getting a meal, you know, having a 0:10:56.356 --> 0:10:58.356 place to stay because you always find a poker game. 0:10:59.356 --> 0:11:01.236 Did you pay you way through Harvard with poker? 0:11:01.356 --> 0:11:01.676 Yes? 0:11:03.116 --> 0:11:05.916 Aaron Brown ends up on Wall Street, then goes to 0:11:05.956 --> 0:11:10.396 work for Cliff Astness at AQR Capital. Of course, a 0:11:10.556 --> 0:11:11.996 match made in Heaven. 0:11:12.196 --> 0:11:13.596 Do you guys think the same way? Do you have 0:11:13.596 --> 0:11:15.196 differences in the way you approach problems? 0:11:15.276 --> 0:11:18.396 Well, the massive difference and the reason he has billions 0:11:18.396 --> 0:11:22.476 of dollars and I have a comfortable living. He cares 0:11:22.796 --> 0:11:29.316 far more. He gets literally physically angry when things don't 0:11:29.316 --> 0:11:32.556 work and lose money. I'd rather work on an interesting 0:11:32.556 --> 0:11:34.756 problem than profitable problem. 0:11:35.476 --> 0:11:37.876 Now what do these two do aside from making money? 0:11:37.876 --> 0:11:42.356 Of course, they do thought experiments, write them up and 0:11:42.436 --> 0:11:46.756 post them online on something called SSRN, the Social Science 0:11:46.876 --> 0:11:51.556 Research Network, in my opinion, the greatest website on the Internet. 0:11:53.356 --> 0:11:56.636 It's a place where anyone, anyone can post any kind 0:11:56.676 --> 0:11:59.956 of paper or research or argument, and every article posted 0:12:00.276 --> 0:12:03.476 is then ranked according to its popularity. As I'm writing this, 0:12:03.876 --> 0:12:07.076 there are seven hundred and ninety eight seven hundred and 0:12:07.076 --> 0:12:11.156 forty five papers on SSRN. I don't know if you remember. 0:12:11.316 --> 0:12:13.836 Back at the beginning of this season an episode called 0:12:13.876 --> 0:12:16.596 Divide and Conquer, I talked about my love of law 0:12:16.636 --> 0:12:19.396 review articles. Well, where do you think I read law 0:12:19.436 --> 0:12:22.916 review articles? Not in law reviews? Are you kidding? Why 0:12:22.956 --> 0:12:25.596 would I wait two years for some dusty publication to 0:12:25.636 --> 0:12:29.196 put something out. I read them on SSRN because that's 0:12:29.236 --> 0:12:33.356 where everyone posts their articles the minute they finish. In Manhattan. 0:12:33.396 --> 0:12:36.396 For years, the most important source of gossip was page 0:12:36.436 --> 0:12:40.716 six of the New York Post. SSRN is page six 0:12:41.036 --> 0:12:46.556 for Dorks, so not long ago. I'm on SSRN poking 0:12:46.596 --> 0:12:49.756 around and lo and behold what is the number one 0:12:49.836 --> 0:12:53.956 ranked paper at the time. Pulling the goalie Hockey and 0:12:54.036 --> 0:13:00.796 Investment Implications by Clifford Astas and Aaron Brown. I thought 0:13:00.836 --> 0:13:04.196 I didn't have any rules for living. I was wrong. 0:13:05.876 --> 0:13:11.156 Pulling a goaltender down three so really giving a big 0:13:11.196 --> 0:13:14.636 advantage on the power of flay with possession firmly a standler. 0:13:16.196 --> 0:13:19.676 Here's the issue. You're playing hockey. Your team is down 0:13:19.716 --> 0:13:22.476 by one goal late in the game. The coach of 0:13:22.516 --> 0:13:26.836 the losing team typically removes his own goalie and substitutes 0:13:26.876 --> 0:13:29.956 in an extra attacker. So instead of having five offensive 0:13:29.956 --> 0:13:32.556 players and a goalie guarding the net, he now has 0:13:32.636 --> 0:13:37.956 six offensive players and no one guarding his net. 0:13:39.196 --> 0:13:42.596 That don't make him pay for it, I'm shorthanded goal. 0:13:43.276 --> 0:13:46.236 It's a tradeoff. Pulling a goalie makes it easier for 0:13:46.236 --> 0:13:48.476 the other team to score and put the game even 0:13:48.556 --> 0:13:51.116 further out of reach, But at the same time, your 0:13:51.156 --> 0:13:54.556 extra attacker increases your chances of scoring a goal and 0:13:54.636 --> 0:14:00.916 tying the game. Now, if you watch hockey, you know 0:14:00.956 --> 0:14:03.196 that coaches typically pull a goalie with a minute or 0:14:03.196 --> 0:14:05.196 a minute and a half left in the game. But 0:14:05.276 --> 0:14:09.476 that's just hockey tradition. It's not based on data. When 0:14:10.036 --> 0:14:12.276 exactly should you pull the goalie? 0:14:12.996 --> 0:14:15.756 Tell me the genesis of this paper I love so much. 0:14:16.076 --> 0:14:19.796 Okay, Well, Cliff and I talk a lot about sort 0:14:19.836 --> 0:14:23.516 of quant sports stuff, and I have always been talking 0:14:23.516 --> 0:14:29.276 to him about decisions that coaches make that are mathematically indefensible, 0:14:29.356 --> 0:14:32.316 but you know, makes sense from the coach's motivation. And 0:14:32.556 --> 0:14:37.556 specifically we were talking about Seattle Seahawks twenty fourteen Super 0:14:37.556 --> 0:14:39.556 Bowl New New England Patriots. I got the ball on 0:14:39.596 --> 0:14:42.156 the one yard line, second down, twenty six seconds. 0:14:41.796 --> 0:14:44.916 To go, second in goal, Russell Wilson, what are you doing? 0:14:45.276 --> 0:14:49.076 He gets picked up by the undrafted rookie free agent. 0:14:48.876 --> 0:14:52.116 From Western Alabama, Malcolm Butler. 0:14:51.836 --> 0:14:53.356 Who preserves the victory. 0:14:53.516 --> 0:14:57.236 And it will leave everybody asking why in the world. 0:14:56.956 --> 0:14:59.716 With marsha on in the back building, the Seahawks throw 0:14:59.796 --> 0:15:03.196 the football twenty one reasons. At this point, Brown goes 0:15:03.236 --> 0:15:07.876 on a tangent for maybe fifteen minutes about that particular play, 0:15:08.236 --> 0:15:11.356 which has gone down in Super Bowl lore as one 0:15:11.356 --> 0:15:14.356 of the worst coaching decisions in the history of football. 0:15:14.956 --> 0:15:17.916 But Brown convinces me that in fact, it was the 0:15:17.996 --> 0:15:21.356 right call, the rational call, and I would explain his 0:15:21.436 --> 0:15:25.276 logic to you, except that we have much bigger fish 0:15:25.276 --> 0:15:29.836 to fry. Anyway, talk turns to pulling the goalie in hockey, 0:15:30.196 --> 0:15:33.636 and Cliff says to Aaron, Oh, I've done some work 0:15:33.676 --> 0:15:34.396 on this already. 0:15:34.876 --> 0:15:38.076 It's probably six seven years ago, man, five six years ago. 0:15:38.436 --> 0:15:41.956 I wrote this model and xcept out of pure personal interest. 0:15:42.556 --> 0:15:44.316 I thought I had a neat way to think about 0:15:44.716 --> 0:15:48.356 the problem, and essentially it was it's really hard to 0:15:48.356 --> 0:15:51.796 think about what five minutes left, but with ten seconds left, 0:15:51.836 --> 0:15:53.076 it's really easy to think about. 0:15:53.676 --> 0:15:57.196 Cliff shared his calculations with Aaron Brown. Aaron made them 0:15:57.196 --> 0:16:01.076 better and built a beautiful computer model, and their conclusion 0:16:01.276 --> 0:16:03.956 was a team down by one goal should pull its 0:16:03.956 --> 0:16:07.556 goalie with five minutes and forty seconds left in the game, 0:16:08.036 --> 0:16:10.476 and a team down by two goals should pull its 0:16:10.516 --> 0:16:15.076 goalie with eleven minutes and forty seconds left. Eleven minutes 0:16:15.316 --> 0:16:20.036 and forty seconds with an undefended goal. No one in 0:16:20.076 --> 0:16:22.916 all of hockey pulls their goalie with that much time left. 0:16:23.356 --> 0:16:25.676 If a coach did that in a playoff game with 0:16:25.836 --> 0:16:29.636 real stakes involved, the entire arena would probably go up 0:16:29.636 --> 0:16:36.396 in smoke. In basketball and baseball, there's been a statistical 0:16:36.436 --> 0:16:40.276 revolution over the past generation known as moneyball, where advanced 0:16:40.316 --> 0:16:43.636 metrics have been applied to maximize every aspect of the game. 0:16:44.116 --> 0:16:47.356 Hockey is a step behind, with the exception of my 0:16:47.516 --> 0:16:50.396 beloved Toronto maple Leafs, who if a genuine quant is 0:16:50.436 --> 0:16:54.196 their leader. This is a sport where players pick fights 0:16:54.236 --> 0:16:56.596 with each other in full knowledge of the fact that 0:16:56.636 --> 0:17:00.196 the penalty for their transgressions will materially diminish their team's 0:17:00.276 --> 0:17:04.916 chances of winning. Baseball is quantum theory. Hockey is the 0:17:04.916 --> 0:17:08.036 grown up, professional version of Red Rover, Red Rover, let 0:17:08.076 --> 0:17:12.916 Waying Gretzky come over. Hockey coaches are not looking for 0:17:12.996 --> 0:17:17.036 strategic tips on SSRN, So what do they do? They 0:17:17.156 --> 0:17:19.996 keep their goalie in place until the very last minute, 0:17:20.316 --> 0:17:23.556 defending the goal. And why do they keep doing that? 0:17:24.196 --> 0:17:33.556 Because anything else would be impossibly disagreeable. Imagine you're a 0:17:33.596 --> 0:17:35.556 coach of a hockey team down three to one with 0:17:35.676 --> 0:17:38.156 eleven minutes and forty seconds left in the game. You 0:17:38.236 --> 0:17:40.916 pull your goalie. The other team scores, so now it's 0:17:41.036 --> 0:17:43.316 for to one with half of the final period left, 0:17:43.476 --> 0:17:45.676 and now your fans think that you've robbed them of 0:17:45.716 --> 0:17:48.676 what might have been a reasonably interesting game. They'll hate 0:17:48.716 --> 0:17:53.956 you and so your players, because it's an awful lot 0:17:53.956 --> 0:17:57.356 more humiliating to lose a lopsided game than a close one. 0:17:57.836 --> 0:18:03.036 The Cliff and Aaron strategy maybe, again inn our geeky sense, optimal, 0:18:03.316 --> 0:18:06.356 but it doesn't provide the optimal or the maximum amount 0:18:06.396 --> 0:18:07.156 of entertainment. 0:18:07.716 --> 0:18:09.356 It is very high. 0:18:09.236 --> 0:18:13.236 Probability you create a laugher where you get down by three, 0:18:13.276 --> 0:18:14.996 down by four, And of course, if you follow Cliff 0:18:15.036 --> 0:18:18.036 and Aaron's cold vulcan model you never put the goalie 0:18:18.076 --> 0:18:21.116 back in. You're still an infinitesimal chance you will tie it, 0:18:21.436 --> 0:18:24.516 and you lose fourteen to nothing. And it's embarrassing and 0:18:24.836 --> 0:18:27.196 maybe entertainment in a side show kind of way, but 0:18:27.276 --> 0:18:28.276 it's not what they want. 0:18:28.916 --> 0:18:32.596 Who would try this or anything like it, Not anyone 0:18:32.636 --> 0:18:36.556 who has any normal human expectation of being liked and applauded. 0:18:37.156 --> 0:18:40.636 But do Cliff and Aaron need to be liked and applauded. No, 0:18:40.716 --> 0:18:44.436 they don't. Astas founded his firm with a couple of 0:18:44.436 --> 0:18:47.476 other PhD graduates from the finance department of the University 0:18:47.516 --> 0:18:50.996 of Chicago, which is like the geek capital of the world, 0:18:51.716 --> 0:18:54.676 and his basic hiring philosophy ever since has been to 0:18:54.756 --> 0:19:00.356 hire more PhDs disagreeable quants just like him. He's now 0:19:00.436 --> 0:19:05.356 up to seventy three PhDs. For comparison purposes, the economics 0:19:05.396 --> 0:19:09.636 faculty at MIT has forty one PhDs at one point 0:19:09.676 --> 0:19:14.316 seven eight x MIT and counting. Now does he need 0:19:14.356 --> 0:19:17.596 that many PhDs? I have no idea, But how much 0:19:17.676 --> 0:19:21.476 more fun is office life for insanely smart, disagreeable people 0:19:21.596 --> 0:19:24.396 if at all times they are surrounded by dozens and 0:19:24.476 --> 0:19:28.636 dozens of other insanely smart and disagreeable people circling each 0:19:28.676 --> 0:19:30.876 other's arguments like vultures. 0:19:32.596 --> 0:19:34.556 Which is going to be one of the watershed days 0:19:34.636 --> 0:19:35.916 in financial market's history. 0:19:36.076 --> 0:19:38.596 It was a manic Monday in the financial markets. 0:19:39.716 --> 0:19:42.836 The Dow tumbled more than five hundred points after two 0:19:42.916 --> 0:19:45.276 pillars of the Street tumbled over the weekend. 0:19:45.916 --> 0:19:48.276 Remember the start of the financial crisis in two thousand 0:19:48.276 --> 0:19:50.636 and eight, when no one knew what to do as 0:19:50.636 --> 0:19:53.396 stocks were falling in banks teetering on the brink, and 0:19:53.436 --> 0:19:55.916 everyone was running around screaming for the Secretary of the 0:19:55.956 --> 0:19:59.836 Treasury to do something. Aaron Brown told me that if 0:19:59.876 --> 0:20:03.836 he had been Treasury Secretary, he would have done nothing. 0:20:04.516 --> 0:20:06.876 In fact, he would have gone on vacation for a 0:20:06.876 --> 0:20:09.636 few months, because the truth was no no one knew 0:20:09.676 --> 0:20:11.676 what to do. And when no one knows what to do, 0:20:11.796 --> 0:20:14.596 Aaron Brown says, the rational thing is to wait until 0:20:14.636 --> 0:20:17.276 you have the data you need before you start throwing 0:20:17.316 --> 0:20:21.876 around trillions of dollars in bailout money. This is exactly 0:20:21.916 --> 0:20:24.836 the kind of thing that someone with a disagreeable score 0:20:25.076 --> 0:20:28.476 of eight point five would say. In times of panic, 0:20:28.916 --> 0:20:32.676 the agreeable Treasury Secretary would want to be a calming presence, 0:20:33.076 --> 0:20:35.956 to project stability and wisdom, to have others look at 0:20:35.996 --> 0:20:39.716 him and nod approvingly and murmur something about the importance 0:20:39.756 --> 0:20:42.676 of a firm hand at the tiller. But not Aaron Brown. 0:20:43.356 --> 0:20:46.596 He doesn't care about Wall Street's feelings. He cares about 0:20:46.596 --> 0:20:49.836 the trillion dollars people would be calling for his head. 0:20:50.276 --> 0:20:54.716 He would be pullside in Boca, browsing SSRN on his BlackBerry. 0:20:58.996 --> 0:21:02.076 Oh man, how great if we could all be as 0:21:02.236 --> 0:21:04.356 disagreeable as Cliff and Aaron. 0:21:09.396 --> 0:21:11.876 I suppose you were. Let me give you a hypothical scenario. 0:21:12.396 --> 0:21:15.516 You have a plucky young team and inexplicably you have 0:21:16.156 --> 0:21:19.396 ended up in the Stanley Cup Finals and you're up 0:21:19.436 --> 0:21:22.796 against one of the great Pittsburgh Penguin teams in the 0:21:22.876 --> 0:21:27.196 last couple of years. Would you consider pulling the goalie 0:21:27.196 --> 0:21:28.036 to start the game? 0:21:28.276 --> 0:21:30.716 I absolutely would love to do it, and I'd have 0:21:30.756 --> 0:21:31.396 to do the math. 0:21:33.396 --> 0:21:47.916 Do the math always, We'll be right back. A few 0:21:47.956 --> 0:21:50.956 years ago a movie came out called No Good Deed, 0:21:51.636 --> 0:21:55.676 starring Taraji p Henson as a woman named Terry and 0:21:55.716 --> 0:22:04.756 the ridiculously handsome Idris Elba as Colin. No Good Deed 0:22:04.996 --> 0:22:08.396 is a home invasion movie, and home invasion movies are 0:22:08.396 --> 0:22:12.356 of a piece with pulling the goalie. They are meditations 0:22:12.436 --> 0:22:17.276 on disagreeableness. Not to get pretentious, but both goalie pulling 0:22:17.396 --> 0:22:20.316 and the home invasion genre are versions of the canonical 0:22:20.396 --> 0:22:23.916 story of God commanding Abraham to kill his son Isaac. 0:22:25.836 --> 0:22:29.476 Sorren Kirkgard wrote about it in Fear and Trembling. God 0:22:29.596 --> 0:22:34.156 commands Abraham to sacrifice his son Isaac to demonstrate his loyalty, 0:22:34.596 --> 0:22:37.956 and the rational thing is for Abraham to obey God 0:22:38.476 --> 0:22:41.516 because If God is all powerful, then Abraham's future and 0:22:41.556 --> 0:22:44.156 the future of his family depend on being in God's 0:22:44.156 --> 0:22:47.036 good graces. But how can he look his son in 0:22:47.076 --> 0:22:50.756 the eye and then kill him. It's a disagreeableness test. 0:22:51.436 --> 0:22:53.556 How much will you let the thought of what others 0:22:53.636 --> 0:22:56.316 think of you and what you think of yourself get 0:22:56.356 --> 0:22:57.836 in the way of doing what is right in the 0:22:57.876 --> 0:23:00.916 eyes of God? On the one side is fear, on 0:23:00.996 --> 0:23:05.476 the other trembling. This is exactly what goes on in 0:23:05.556 --> 0:23:06.556 home invasion movies. 0:23:06.836 --> 0:23:07.476 Absolutely. 0:23:07.796 --> 0:23:10.036 That's Ami Lagos who wrote No Good Deed. 0:23:10.436 --> 0:23:13.676 To me, that's at the core of why these movies 0:23:14.236 --> 0:23:19.156 are interesting to people. Why the home invasion genre? You know, 0:23:19.236 --> 0:23:22.236 it's an actual genre at this point, you know why 0:23:22.516 --> 0:23:23.676 it persists. 0:23:24.396 --> 0:23:27.716 I called Logos up after the Revisionist History research team 0:23:27.756 --> 0:23:30.916 determined that No Good Deed was the most perfectly Kureka 0:23:30.916 --> 0:23:32.756 guardian of all home invasion movies. 0:23:33.316 --> 0:23:38.556 It puts you in these incredibly morally ambiguous situations where 0:23:39.436 --> 0:23:43.116 the audience can see the direct path to success. 0:23:43.796 --> 0:23:48.356 So here's the premise of No Good Deed. It's late 0:23:48.476 --> 0:23:53.996 on a Friday night, raining hard. Terry is at home 0:23:53.996 --> 0:23:55.196 with her two small children. 0:23:56.796 --> 0:23:57.396 Okay, finished. 0:23:57.796 --> 0:24:01.596 The doorbell rings. It's interests Elba. 0:24:02.876 --> 0:24:04.356 I'm sorry. I don't mean to bother you. 0:24:04.916 --> 0:24:07.196 I just lost Jola macaw as directed. 0:24:07.796 --> 0:24:10.236 He says he's been in an accident and he forgot 0:24:10.276 --> 0:24:14.196