WEBVTT - Why The Human Brain Loves To Be Lied To 0:00:09.280 --> 0:00:12.639 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:12.680 --> 0:00:18.079 I'm Joe Wisen and I'm Tracy Hallowitt. Hi, Tracy, we're 0:00:18.079 --> 0:00:20.360 in the same room together. I know um and I'm 0:00:20.360 --> 0:00:22.480 looking at you while I say hello, which is different 0:00:22.480 --> 0:00:24.279 to what we normally do. But it's nice to see 0:00:24.320 --> 0:00:28.280 you in person again. Absolutely. Okay, So we're not talking 0:00:28.320 --> 0:00:32.600 about poker on this episode. Now, I love poker and chess, 0:00:32.760 --> 0:00:34.960 anything else that you love. We're not talking about poker 0:00:34.960 --> 0:00:37.080 on this episode. But remember a couple of weeks ago 0:00:37.159 --> 0:00:40.479 when we talked to uh Andy Douke, the former professional 0:00:40.520 --> 0:00:43.320 poker player. Of course, one of our best episodes I 0:00:43.360 --> 0:00:46.520 think in a while, and of course her whole thing. 0:00:46.600 --> 0:00:49.600 And she has this new book out called Thinking in Beds, 0:00:50.080 --> 0:00:53.280 and one of her big ideas that she talked about 0:00:53.440 --> 0:00:57.320 was that to be successful in poker or trading, which 0:00:57.400 --> 0:01:01.800 is particularly relevant to us, people have to not get 0:01:01.840 --> 0:01:04.280 attached to certain ideas. They have to be willing to 0:01:04.319 --> 0:01:08.560 discard things that are wrong, which is very tough for people. Yeah, 0:01:08.600 --> 0:01:11.880 there's a lot of confirmation bias in trading, and people 0:01:11.959 --> 0:01:14.840 kind of refuse to let go of trades that are 0:01:14.880 --> 0:01:16.520 going the wrong way. Right because they think it will 0:01:16.560 --> 0:01:18.920 come back eventually, they really want to be right, or 0:01:18.959 --> 0:01:22.600 they want to fit a market move into some existing 0:01:22.840 --> 0:01:26.760 worldview and really jam it in. And Okay, so we 0:01:26.800 --> 0:01:28.679 say all that, we're like, oh, people do this, and 0:01:28.880 --> 0:01:31.720 I think that's pretty easy for people to accept. But 0:01:31.840 --> 0:01:34.640 I raised the question of why we do this? Why 0:01:34.720 --> 0:01:37.240 is it so hard for us to update our beliefs 0:01:37.240 --> 0:01:40.039 when new faction merge? Or why are we so interested 0:01:40.680 --> 0:01:43.840 in coming up with an idea and fitting it into 0:01:43.920 --> 0:01:47.240 an ideology or worldview even if it doesn't fit. Yeah? 0:01:47.240 --> 0:01:53.040 Why are we seemingly incontrovertibly forever doomed to repeat this 0:01:53.120 --> 0:01:57.000 one mistake? And why do we hate the truth? Right? Yeah? Okay, okay, yes, 0:01:57.600 --> 0:02:00.559 So today we're going to try to answer that question 0:02:00.600 --> 0:02:02.480 why we why we hate the truth, why we all 0:02:02.520 --> 0:02:06.560 hate facts? And why this makes us all bad traitors? Okay? 0:02:06.760 --> 0:02:08.520 Who are we talking to on this one? So I'm 0:02:08.600 --> 0:02:11.240 very excited. I came across this paper the other day. 0:02:11.280 --> 0:02:14.920 It's called the partisan Brain, an identity based model of 0:02:15.000 --> 0:02:18.720 political belief and it talks about various explanations for this 0:02:18.800 --> 0:02:22.440 phenomenon of our brains rejecting truth. And we have one 0:02:22.480 --> 0:02:26.320 of the authors, j Van Babl. He is a professor 0:02:26.360 --> 0:02:29.280 at n y U and uh, he's going to walk 0:02:29.360 --> 0:02:32.840 us through um some of his research. What does he learned? Specifically, 0:02:32.840 --> 0:02:36.000 he's an associate professor of psychology and neural science at 0:02:36.120 --> 0:02:38.120 New York University. So he's going to explain to us 0:02:38.120 --> 0:02:40.760 why we like lies, why we like lies exactly. Let's 0:02:40.800 --> 0:02:48.520 do it. J Van Babel, thank you very much, thanks 0:02:48.560 --> 0:02:51.919 for having so is this accurate? Do we just all 0:02:51.960 --> 0:02:55.080 hate the truth? Sometimes we love the truth. It really 0:02:55.160 --> 0:02:58.359 hinges on what our goals are. If we're looking for accuracy, 0:02:58.600 --> 0:03:02.440 and that's part of our edity, then we look to 0:03:02.480 --> 0:03:05.120 see code evidence that we might be wrong, or at 0:03:05.200 --> 0:03:10.280 least verification that we know what we believe. And if 0:03:10.639 --> 0:03:15.560 we are motivated by other goals, For example, if we 0:03:15.639 --> 0:03:18.280 have a commitment to a political belief for a political party, 0:03:18.840 --> 0:03:22.080 we might be compelled to believe them and ignore facts 0:03:22.080 --> 0:03:25.120 that contradict that particular identity. So I set it up 0:03:25.240 --> 0:03:29.400 obviously within the context of odd lots we talk about 0:03:29.480 --> 0:03:33.400 markets and trading. The paper itself, though, is about you know, 0:03:33.440 --> 0:03:37.240 as the title says, the partisan brain, My intuition and 0:03:37.360 --> 0:03:39.240 my sentence is that a lot of what you've studied 0:03:39.240 --> 0:03:44.160 about how political ideologues see the world has applicability to 0:03:44.520 --> 0:03:46.960 the realm of trading in other areas. But just sort 0:03:47.000 --> 0:03:49.520 of give us the overview of what this paper tried 0:03:49.560 --> 0:03:51.560 to show. So what this paper tries to do is 0:03:51.600 --> 0:03:56.000 bridge research in political science, which is about political parties 0:03:56.040 --> 0:03:59.720 and ideologies with research and psychology, so what types of 0:03:59.760 --> 0:04:02.760 things motivate us to engage in certain behaviors or hold 0:04:02.760 --> 0:04:05.560 certain beliefs as well as neuroscience. So we looked inside 0:04:05.600 --> 0:04:08.360 the brain and try to get a handle on if 0:04:08.360 --> 0:04:11.240 you're being biased in some way by some commitment to 0:04:11.720 --> 0:04:15.120 uh an identity or political party. Is that shaping the 0:04:15.160 --> 0:04:17.640 way that you're reasoning, So your prefrontal cortex, is it 0:04:18.160 --> 0:04:23.200 overactive and trying to argue or change your understanding of something, 0:04:23.600 --> 0:04:26.479 or is it shaping our memory or emotional system or 0:04:26.520 --> 0:04:29.640 maybe even our perceptual interpretations of the world, which is 0:04:29.880 --> 0:04:32.760 really damning because if you're shaping how you see the world, 0:04:33.320 --> 0:04:35.359 it's gonna be really hard to fix that. It's like 0:04:35.360 --> 0:04:38.039 a perceptual illusion where you know, you see the dress 0:04:38.080 --> 0:04:39.839 one way, I see it another way with another set 0:04:39.839 --> 0:04:42.480 of colors and we'll just forever argue about it. So 0:04:42.520 --> 0:04:45.360 what exactly did you find then? Because in my mind 0:04:45.440 --> 0:04:47.520 I can imagine like I get a little bit of 0:04:47.640 --> 0:04:50.280 a shot of serotonin every time someone tells me I'm 0:04:50.360 --> 0:04:53.200 right or says that was a good question. So when 0:04:53.200 --> 0:04:56.800 I think about these sort of confirmation biases, that's what 0:04:56.880 --> 0:04:58.560 I think about. But you seem to be talking about 0:04:58.640 --> 0:05:02.640 wide variety here. Yeah, so confirmation is certainly part of it. 0:05:02.720 --> 0:05:05.640 We want to confirm what we are pret existing beliefs. 0:05:05.640 --> 0:05:11.080 But what matters more is confirming or supporting or affirming 0:05:11.120 --> 0:05:14.440 particular identities you have. And so if you're a trader 0:05:14.480 --> 0:05:19.159 who's committed to, you know, economic outcomes of improving your performance, 0:05:19.520 --> 0:05:21.240 you should care a lot about facts. If you're an 0:05:21.240 --> 0:05:24.560 investigative journalist or a scientist, if those are your identities, 0:05:24.880 --> 0:05:27.680 you care a lot about truth. But most people don't 0:05:27.720 --> 0:05:30.000 care about those things most of the time. And even 0:05:30.080 --> 0:05:34.800 professors or traders or journalists sometimes get led astray by 0:05:34.839 --> 0:05:38.400 other goals that they have a goal to achieve status 0:05:38.520 --> 0:05:43.200 or power or um affirm SENSI belonging, so to do 0:05:43.320 --> 0:05:47.120 what is popular, or people might engage in what's called groupthink, 0:05:47.320 --> 0:05:49.240 where they're kind of fitting in with the group beliefs 0:05:49.360 --> 0:05:52.880 or norms, and those types of political motives and social 0:05:52.920 --> 0:05:56.720 motives can lead us astray. So you might one might 0:05:56.880 --> 0:05:59.720 you know, you give some examples in your research of 0:06:00.080 --> 0:06:03.120 political ideologus or people who are belonging to one party 0:06:03.120 --> 0:06:07.640 actually remembering facts differently. So, for example, Democrats are more 0:06:07.680 --> 0:06:11.039 likely to believe incorrectly that George W. Bush was on 0:06:11.120 --> 0:06:15.560 vacation during Hurricane Katrina, so things like that. So but 0:06:15.720 --> 0:06:19.120 in the research you explained that to some extent, it 0:06:19.200 --> 0:06:22.640 makes sense. In other words, the brain puts a higher 0:06:22.680 --> 0:06:27.240 priority on believing something that makes sense for the group Democrats, 0:06:27.800 --> 0:06:31.440 rather than putting a higher priority on factual accuracy. So 0:06:31.520 --> 0:06:35.560 why does the brain elevate that sense above accuracy. Yeah, 0:06:35.640 --> 0:06:37.800 so that's a great question. It goes back to thinking 0:06:37.839 --> 0:06:40.400 about why do we have the brains we do. And 0:06:40.480 --> 0:06:44.200 so our brains evolved over several hundred thousand years in 0:06:44.320 --> 0:06:48.640 small tribes in Africa, and we were Humans are pretty 0:06:48.640 --> 0:06:52.159 flimsy creatures. Okay, so we're not very strong or particularly fast, 0:06:52.200 --> 0:06:54.720 so we're gonna get swallowed up by other creatures very 0:06:54.760 --> 0:06:57.640 quickly unless we cooperated and fit in and if you 0:06:57.640 --> 0:07:00.760 didn't fit in, you were shandrised from the group, and 0:07:00.800 --> 0:07:03.640 so that was incredibly threatening. It was literally a threat 0:07:03.640 --> 0:07:06.480 to your survival and certainly you would have had reproductive 0:07:06.480 --> 0:07:09.679 opportunities if you weren't well respected and liked in your group. 0:07:10.200 --> 0:07:12.800 And you can see the same thing in chimpanzees are 0:07:12.800 --> 0:07:16.400 are one of our nearest genetic neighbors. Um they care 0:07:16.440 --> 0:07:18.120 a lot about what their status is in the group, 0:07:18.200 --> 0:07:20.200 and if they're excluded or if they fall down to 0:07:20.240 --> 0:07:22.800 the bottom of the ladder, the outcomes for them aren't 0:07:22.880 --> 0:07:25.320 very good and they're less likely to survive or pass 0:07:25.320 --> 0:07:28.880 along their genes to future generations. And so through evolution, 0:07:28.920 --> 0:07:34.480 we've developed these brains that are well adapted for fitting 0:07:34.480 --> 0:07:36.840 into groups and getting along with other people in our groups, 0:07:36.840 --> 0:07:39.080 and to the extent we can do that, and a 0:07:39.120 --> 0:07:42.880 lot of it is through psychological tricks that guide us 0:07:42.920 --> 0:07:45.760 towards things that now look irrational, but if you think 0:07:45.800 --> 0:07:49.160 about human history, they actually were rational. They helped us survive, 0:07:49.280 --> 0:07:52.600 and that's why we're the ancestors who have these particular 0:07:52.680 --> 0:07:56.080 quirks of cognition. So if you were a stone age 0:07:56.120 --> 0:07:59.480 Cassandra preaching the truth put it threatened the rest of 0:07:59.480 --> 0:08:01.160 your tribe, they would kick you out, or at the 0:08:01.240 --> 0:08:03.160 very least you wouldn't be able to find a mate. 0:08:03.320 --> 0:08:06.800 There are no shortage of examples of that throughout history. 0:08:07.040 --> 0:08:10.760 So I imagine that that sort of evolution and that 0:08:10.840 --> 0:08:15.760 tribal heritage probably doesn't align very well with the modern world. 0:08:16.240 --> 0:08:19.360 It doesn't. Yeah, we live. So we're here in Manhattan. 0:08:19.400 --> 0:08:23.000 It's incredibly safe. We're safer and more prosperous than any 0:08:23.000 --> 0:08:26.640 time in human history, and so we really don't have 0:08:26.720 --> 0:08:29.160 a need to be afraid of a lot of things 0:08:29.240 --> 0:08:31.720 that we're afraid of. But we are because we have 0:08:31.800 --> 0:08:34.200 the brain that is over sensitive to things that might 0:08:34.400 --> 0:08:38.520 have killed our ancestors. What are some other examples of 0:08:38.640 --> 0:08:45.439 ways that the brain prioritizes things other than pure factual accuracy. Yeah, 0:08:45.440 --> 0:08:48.280 So I would say I was mentioning to you both 0:08:48.280 --> 0:08:49.840 earlier before we got on the show, is I'm a 0:08:49.840 --> 0:08:53.120 big sports fan, and one of the first things professional 0:08:53.120 --> 0:08:55.560 gamblers will tell you is don't bet on your favorite teams. 0:08:55.920 --> 0:08:58.400 And the reason is because we're so identified with those teams, 0:08:58.440 --> 0:09:02.320 we want them to win to affirm our fanship and 0:09:02.360 --> 0:09:05.120 identity with them, that we make bad bets and so 0:09:05.160 --> 0:09:08.040 if you ever want to sucker somebody, get them to 0:09:08.520 --> 0:09:11.080 support some team that they really love or have a 0:09:11.120 --> 0:09:14.400 flag flying out of their front porch on and that's 0:09:14.440 --> 0:09:16.720 the type of person who's going to be more likely 0:09:16.760 --> 0:09:19.440 to overestimate the probability of success of that. And is 0:09:19.440 --> 0:09:24.160 it that same group think social comfort that causes that. 0:09:24.280 --> 0:09:26.400 Is that essentially that just go back to that same 0:09:26.400 --> 0:09:29.320 survival instinct. Yeah, it's driven by our need to belong, 0:09:29.679 --> 0:09:32.600 our need for status, um also our need to be 0:09:32.720 --> 0:09:35.800 good virtuous people. So we like to think, especially our 0:09:35.840 --> 0:09:38.640 political groups, which are attached to morality, are virtuous, are 0:09:38.679 --> 0:09:40.439 better than the other ones. And if we didn't think that, 0:09:40.480 --> 0:09:43.000 we wouldn't vote for them in the first place. And 0:09:43.040 --> 0:09:45.480 so we're constantly looking for evidence that we're on the 0:09:45.559 --> 0:09:49.559 right side of political history. So you touched on this earlier. 0:09:49.640 --> 0:09:53.040 But if you are a trader, you think that maybe 0:09:53.160 --> 0:09:56.480 because your motivation is to make money, the bias doesn't 0:09:56.520 --> 0:09:59.640 come into it as much. Is that your general just 0:09:59.720 --> 0:10:02.480 I know of paper was about political biases. But yeah, 0:10:02.480 --> 0:10:05.120 so let me give you an example of political bias. 0:10:05.320 --> 0:10:08.120 There's some research showing that if you put monetary stakes 0:10:08.720 --> 0:10:11.440 on what people say politically, they're more likely to be accurate, 0:10:12.080 --> 0:10:14.280 and so there is reason to believe that that kind 0:10:14.280 --> 0:10:18.480 of financial accountability can increase the extent to which you 0:10:18.559 --> 0:10:22.280 value accuracy and guide you to the right answer, But 0:10:22.360 --> 0:10:24.920 it doesn't get you all the way there, and sometimes 0:10:24.960 --> 0:10:27.680 that bias pops up in other places in your behavior. 0:10:27.720 --> 0:10:31.040 And so I think traders have pretty good built in 0:10:31.040 --> 0:10:34.760 incentives to make them more accurate. But again, they're human, 0:10:34.840 --> 0:10:37.880 and when they're not thinking about the bottom mind that 0:10:37.960 --> 0:10:41.440 might be thinking about status or stature in the economic 0:10:41.440 --> 0:10:43.520 world or something like that. Those are the types of 0:10:43.520 --> 0:10:45.480 motives that are likely to guide them astray. So I 0:10:45.559 --> 0:10:48.160 remember thinking about this very vividly in the wake of 0:10:48.200 --> 0:10:51.880 the financial crisis, because there were a lot of these 0:10:51.960 --> 0:10:55.760 legacy hedge funders who didn't like fiscal stimulus and they 0:10:55.760 --> 0:10:59.280 didn't like quantitative easing and you're all kind of conservative 0:10:59.440 --> 0:11:02.720 and cray key and being too mean, but they a 0:11:02.720 --> 0:11:04.960 lot of them came of age during the Reagan era 0:11:05.640 --> 0:11:09.640 and they know and like it was very clear that 0:11:09.880 --> 0:11:13.720 experience and that ideology, and they many of them were 0:11:13.800 --> 0:11:16.640 very barished for too long. And I remember the hedge 0:11:16.640 --> 0:11:20.400 funder David Temper who was a Democrat, and he did 0:11:20.400 --> 0:11:22.880 phenomenally well. And I don't think it's because democrats are 0:11:22.960 --> 0:11:25.840 better traders. I think it was because and I thought 0:11:25.840 --> 0:11:29.000 at the time that he didn't have any particular reason 0:11:29.080 --> 0:11:32.120 to dislike the overall situation right now, and he didn't 0:11:32.240 --> 0:11:34.640 let that get in the way of his, uh of 0:11:34.679 --> 0:11:37.800 his trading. Yeah, so I'm glad you connected politics to trading. 0:11:37.840 --> 0:11:40.080 I think there's a really good lesson here. So one 0:11:40.160 --> 0:11:43.920 is that through our experiences we build an ideology, a 0:11:43.960 --> 0:11:46.400 sense of how the world works, whether it's the financial 0:11:46.440 --> 0:11:50.360 system or social relations. And ideologies are really good because 0:11:50.360 --> 0:11:52.520 they can generate all kinds of predictions for us what's 0:11:52.559 --> 0:11:55.319 going to happen and how we should play out certain situations. 0:11:56.480 --> 0:11:58.880 But the problem with ideology is is that we become 0:11:59.080 --> 0:12:01.760 extremely committed to them. We start looking for evidence that 0:12:01.920 --> 0:12:04.640 they're true. And the reason for that is think of 0:12:04.679 --> 0:12:06.280 how threatening it would be if I told you your 0:12:06.280 --> 0:12:08.760 whole belief system was wrong. You have to start from scratch. 0:12:09.400 --> 0:12:12.800 And so that's the reason that we get defensive and 0:12:12.840 --> 0:12:16.760 cling to our worldviews and ideologies. And that's and when 0:12:16.800 --> 0:12:19.480 in situations like that where they lead us astray, it 0:12:19.559 --> 0:12:22.600 often takes a lot of additional evidence to prove those 0:12:22.600 --> 0:12:24.880 people that they're wrong. They're going to cling to that, 0:12:25.160 --> 0:12:27.839 and especially if they've been on the public record or 0:12:27.840 --> 0:12:29.760 among their friends as saying they believe in it. There's 0:12:29.800 --> 0:12:32.400 a social cost to admitting you're wrong. So when it 0:12:32.400 --> 0:12:37.640 comes to building ideologies or trade ideas or financial narratives, 0:12:38.200 --> 0:12:41.640 I feel like the big difference now is that there 0:12:41.760 --> 0:12:45.200 is so much data and information out there that you 0:12:45.200 --> 0:12:48.920 can pretty much cherry pick whatever narrative that you want. 0:12:49.520 --> 0:12:51.920 So how does that play into all of this? Okay, 0:12:51.920 --> 0:12:53.880 so I'll say that's the same as what I think 0:12:53.880 --> 0:12:56.160 has happened in politics that's been really bad, which is 0:12:56.200 --> 0:12:58.800 that used to be you had three major TV stations 0:12:58.800 --> 0:13:01.320 and a trusted news anchor who came on at five pm. 0:13:01.640 --> 0:13:03.560 We're all watching the news, and it was vetted with 0:13:03.800 --> 0:13:07.200 the similar editorial standards. What's happened is you've had the 0:13:07.920 --> 0:13:10.360 dispersion of news. So now you can cherry pick what 0:13:10.480 --> 0:13:12.880 news you want to go to about whatever political story 0:13:12.880 --> 0:13:15.760 of the day, um, and you can kind of drill 0:13:15.840 --> 0:13:18.280 down into some rabbit holes on the internet based on 0:13:18.360 --> 0:13:21.000 whatever you want to believe. And it's probably the same 0:13:21.040 --> 0:13:23.839 thing with a financial information. There's so many people with 0:13:23.960 --> 0:13:27.400 so much information, and instead of relying on a small 0:13:27.480 --> 0:13:31.920 number of trusted sources of information, you could easily get 0:13:32.240 --> 0:13:35.120 stuck looking for evidence for your ideology and probably find 0:13:35.120 --> 0:13:38.000 it no matter what your belief system is. And so 0:13:38.480 --> 0:13:41.600 information can be very helpful to people at times, um 0:13:41.640 --> 0:13:43.480 if they use it in the right way. But the 0:13:43.559 --> 0:13:47.640 brain wants to find evidence that supports its belief and 0:13:47.760 --> 0:13:49.920 that can lead us astray because we'll just cherry pick 0:13:50.360 --> 0:13:53.199 data that supports that belief, and scientists can do that too, 0:13:53.240 --> 0:13:55.199 and it's dangerous for us just as much as it 0:13:55.320 --> 0:13:57.320 is for traders. And I'm thinking a lot too about 0:13:57.400 --> 0:14:00.199 the people who we know, like are very bearish all 0:14:00.200 --> 0:14:04.560 these years, and even the upward move intostoction the economy 0:14:04.679 --> 0:14:07.000 is proof that they're right, because then that just shows 0:14:07.000 --> 0:14:09.000 that the whole thing is rigged in a bubble or 0:14:09.080 --> 0:14:12.560 for the bulls, correction is always it's always exactly right. 0:14:12.559 --> 0:14:15.960 It's the it's the flip side. I'm curious if there 0:14:16.000 --> 0:14:18.880 are patterns of people who are just better than others 0:14:18.880 --> 0:14:21.680 it not falling into this trap. Yeah, So I just 0:14:21.680 --> 0:14:24.400 saw talk on this from a colleague of mine at Yale, 0:14:24.440 --> 0:14:28.840 who's measuring people's analytic abilities, and so you there's a 0:14:28.880 --> 0:14:32.440 simple measure called the cognitive response test that people can take, 0:14:33.000 --> 0:14:36.479 and some people tend to go with intuitive, automatic responses. 0:14:36.480 --> 0:14:39.720 And so one question might be, there's a pond with 0:14:40.000 --> 0:14:43.920 lilies growing on it, and you know, after fifty days, 0:14:43.960 --> 0:14:47.800 the pond is entirely covered and the lilies go double 0:14:47.840 --> 0:14:50.240 in size each day, and so how full was the 0:14:50.280 --> 0:14:55.960 pond at day forty nine? Uh? Half full? Half full? Right? Um? 0:14:56.000 --> 0:14:58.160 A lot of people really like I got by the way, 0:14:58.200 --> 0:15:01.360 there's really stressful quiz in the middle of the poet 0:15:01.720 --> 0:15:05.120 good um. You know, a huge proportion of Ivy League 0:15:05.120 --> 0:15:08.680 students fail this. These types of questions they're not they're 0:15:08.680 --> 0:15:11.240 not easy. The reason is, even people who are smart, 0:15:11.640 --> 0:15:13.920 the instinct is to say twenty five days, because that's 0:15:14.200 --> 0:15:16.960 they're growing at twice the rate every day, and you're 0:15:16.960 --> 0:15:19.400 thinking it's fifty days the ponds full. The halfway point 0:15:19.440 --> 0:15:21.520 should be twenty five days. And so a lot of 0:15:21.520 --> 0:15:23.800 people will say that response, and they do it automatically. 0:15:24.080 --> 0:15:30.360 Some people like you stop, catch yourself, analyze your thinking critically, 0:15:30.440 --> 0:15:33.120 and then give a response. This This just proves that 0:15:33.240 --> 0:15:39.480 I should be a trader. Right. This is like, so 0:15:39.520 --> 0:15:41.640 a lot of us have intuitions about what we should 0:15:41.680 --> 0:15:44.200 do or what's right or wrong, But the best people 0:15:44.240 --> 0:15:46.960 among us say, wait a second, that sounds too good 0:15:47.000 --> 0:15:49.920 to be true, or that news doesn't seem quite right. 0:15:49.960 --> 0:15:52.560 I'm gonna go to fact check it, and a lot 0:15:52.560 --> 0:15:54.640 of fact checking now you can do in thirty seconds 0:15:54.720 --> 0:15:57.480 you go to Snopes or something. But most people don't 0:15:57.520 --> 0:16:00.360 do that. They are like, oh, I knew that along, 0:16:00.480 --> 0:16:03.200 now I'm going to share it. But do those people 0:16:04.120 --> 0:16:07.240 who do take the extra thirty seconds to check something 0:16:07.280 --> 0:16:10.200 on snokes that they saw on Facebook or catch themselves 0:16:10.280 --> 0:16:13.840 before they answer a riddle? Did they descend from some 0:16:14.000 --> 0:16:18.840 other group of people or did they do? Why? Yeah, 0:16:18.880 --> 0:16:24.680 why don't they have that instinct to you know, just basically, well, 0:16:24.800 --> 0:16:27.160 move more on instinct? Yeah, I guess there's some The 0:16:27.160 --> 0:16:29.640 way of thinking about is that there's some situations where 0:16:29.760 --> 0:16:33.480 going with your instinct is helpful, and so what ends 0:16:33.520 --> 0:16:35.760 up What that means is there's other situations where it doesn't. 0:16:35.760 --> 0:16:37.880 So you end up with a normal distribution of humans, 0:16:38.200 --> 0:16:41.840 some of which are very intuitive and guided by automatic reactions, 0:16:41.880 --> 0:16:44.520 and the rest of which are kind of the opposite. 0:16:44.560 --> 0:16:46.680 They're catching themselves. I do think I would not have 0:16:46.720 --> 0:16:49.440 done well on the Stone Age for what I'm just 0:16:49.480 --> 0:16:51.080 putting it out there right now. I think I would 0:16:51.080 --> 0:16:55.360 have been cast out pretty and not found a mate. 0:16:57.560 --> 0:17:02.640 So obviously this has pretty profound implications for politics, especially 0:17:02.680 --> 0:17:05.200 as it gets easier and easier to craft our own narratives. 0:17:05.320 --> 0:17:07.639 And as you know, and there's been a fair amount 0:17:07.640 --> 0:17:09.959 of discussion of this, and we live in our own 0:17:10.280 --> 0:17:12.480 worlds of our own facts and our own new sources, 0:17:12.520 --> 0:17:16.199 and so that aspect of it, people will grasp what 0:17:16.359 --> 0:17:18.280 can is there. You talk a little bit in the 0:17:18.280 --> 0:17:21.080 paper about things that can be done to ameliorate some 0:17:21.200 --> 0:17:25.040 of these effects. So theoretically, if we want to save democracy, 0:17:25.400 --> 0:17:28.520 it would be nice. I maybe people could emerge towards 0:17:28.680 --> 0:17:31.840 one set of shared facts. What works in terms of 0:17:31.880 --> 0:17:37.240 getting people to lower social identity in their mental hierarchies. Yeah, 0:17:37.280 --> 0:17:41.040 so one thing is developing other identities that value accuracy. 0:17:41.680 --> 0:17:44.280 And so all of us have multiple identities. I am 0:17:44.320 --> 0:17:48.480 a father, a son, a professor, a Canadian, and all 0:17:48.520 --> 0:17:50.639 of these come online at different times. When I'm watching 0:17:50.640 --> 0:17:53.840 the Olympics and thinking about my Canadian identity, and at 0:17:53.880 --> 0:17:55.600 that point, I'm just cheering from my team, and I 0:17:55.680 --> 0:18:00.119 might make bad bets on the Canadian national hockey team. 0:18:00.160 --> 0:18:02.520 But when I'm thinking through the lens of a professor, 0:18:02.640 --> 0:18:05.240 that comes with a certain set of training and expectations, 0:18:05.760 --> 0:18:09.439 and I comport myself in a different way and apply 0:18:09.640 --> 0:18:11.560 kind of I put on that set of glasses and 0:18:11.560 --> 0:18:14.159 see the world through that lens, and it's a lot 0:18:14.240 --> 0:18:17.199 more critical than my other identities. And so when I 0:18:17.200 --> 0:18:19.600 want to evaluate facts or before I'm going to share 0:18:19.680 --> 0:18:23.360 something on Twitter, you know, among my followers, I might 0:18:23.400 --> 0:18:26.320 want to share something that is consistent with my identities, 0:18:26.440 --> 0:18:29.600 my other identities, but often I catch myself and I ask, 0:18:29.800 --> 0:18:32.560 is there data to support that? And that's basically because 0:18:32.600 --> 0:18:34.760 I realized my professor friends are going to be seeing it, 0:18:34.800 --> 0:18:37.280 and if I share things that are untrue or unfactual, 0:18:37.280 --> 0:18:40.320 they're gonna jump on board. And so that community I 0:18:40.320 --> 0:18:44.600 belong to is very fiercely skeptical, and so you can 0:18:45.280 --> 0:18:48.040 build your own identities and hang out with communities that 0:18:48.200 --> 0:18:51.399 value accuracy, and some of us aren't comfortable. It's very 0:18:51.400 --> 0:18:54.320 threatening and upsetting to be told you wrong, especially in public. 0:18:55.280 --> 0:18:59.520 Does democracy work if we are biologically destined to favor 0:18:59.720 --> 0:19:02.000 law is and we have a lot of lies being 0:19:02.000 --> 0:19:05.479 flung at us by new forms of media and the internet. Yes, 0:19:05.600 --> 0:19:10.560 so democracy assumes that voters are informed and that they 0:19:10.560 --> 0:19:13.400 can determine what their best interests are or the best 0:19:13.440 --> 0:19:16.240 interests of the country and vote. But if they're fed 0:19:16.880 --> 0:19:21.720 inaccurate information, the collective wisdom of the population is going 0:19:21.800 --> 0:19:25.440 to go awry. And that is a huge risk of democracy, 0:19:25.480 --> 0:19:27.199 not just in the US but around the world right now. 0:19:27.280 --> 0:19:31.000 And that's why other countries are having boughts generating news 0:19:31.040 --> 0:19:33.480 that serves their interests and not ours. See, this is 0:19:33.480 --> 0:19:35.520 why markets are better, because it doesn't matter if a 0:19:35.520 --> 0:19:38.000 bunch of people believe lies or it all comes out 0:19:38.040 --> 0:19:41.000 in the wash, right. And so whereas democracy you sort 0:19:41.000 --> 0:19:44.159 of choose one person over the other, in markets you 0:19:44.200 --> 0:19:47.160 converge on a single price, which tends to be more 0:19:47.280 --> 0:19:50.040 or less usually a pretty good price, although there are 0:19:50.320 --> 0:19:52.560 bubbles and stuff like that. You know, I'm thinking back 0:19:52.600 --> 0:19:55.639 to a really old episode we did on the podcast. 0:19:55.720 --> 0:20:00.320 Remember Dr Brett Steinberger, the He's a Trader psychology. He 0:20:00.400 --> 0:20:02.639 was like the real life, the real life Wendy Rhodes 0:20:03.000 --> 0:20:05.560 from billions who went into hedge funds and talk to 0:20:05.600 --> 0:20:09.080 traders about improving. So I'm curious based on you know, 0:20:09.080 --> 0:20:11.919 if you were brought in, if a hedge funder wanted 0:20:11.960 --> 0:20:16.640 to have you teach his traders essentially how to overcome 0:20:16.840 --> 0:20:21.320 their biases, how to overcome ideological ruts that might prevent 0:20:21.359 --> 0:20:24.120 them from seeing the truth in front of them. How 0:20:24.200 --> 0:20:27.040 might you apply what you've learned about sort of ameliorating 0:20:27.080 --> 0:20:31.200 political um uh, the effects of politics to the world 0:20:31.240 --> 0:20:33.679 of markets. Yeah, so maybe I'd come up with a 0:20:33.760 --> 0:20:36.879 handful of tips. The first one is take your ego 0:20:36.920 --> 0:20:39.879 out of it, So take your own personal motives for 0:20:39.960 --> 0:20:42.080 things like status are belonging out of it as much 0:20:42.080 --> 0:20:43.800 as you can, because those are going to guide you 0:20:43.840 --> 0:20:47.480 a straight on average. The next thing is, um have 0:20:47.560 --> 0:20:50.760 a system where you check yourself so when you feel 0:20:50.760 --> 0:20:53.480 like your intuition is to go one way, have some 0:20:53.560 --> 0:20:56.960 system where you wait an hour or a day or 0:20:57.000 --> 0:20:59.119 sleep on it before you make a big trade, and 0:20:59.160 --> 0:21:02.160 so you're able to process more information and make it 0:21:02.240 --> 0:21:05.679 based on analytics. So that also stops you from engaging 0:21:05.680 --> 0:21:08.720 a group thinking going with the flow of things. The 0:21:08.840 --> 0:21:11.959 other things I would say is try to put your 0:21:12.000 --> 0:21:15.639 political ideology out of the equation. And so, as you 0:21:15.680 --> 0:21:20.800 mentioned that happened in the recovery, some people had ideologies 0:21:20.840 --> 0:21:23.600 based on past experiences in the market and and held 0:21:23.640 --> 0:21:26.160 onto those a little too long. So get your ego 0:21:26.200 --> 0:21:28.399 out of it, your ideology out of it. Build in 0:21:28.440 --> 0:21:31.440 a process that allows you to deliberate. And the other 0:21:31.480 --> 0:21:35.480 thing I think to do is to have a process 0:21:35.560 --> 0:21:38.119 where people around you you can call on them to 0:21:38.280 --> 0:21:41.480