From Edge.org:
Things to Hang on Your Mental Mug Tree
[7.10.17]I don't think there's any huge amount of intelligence required to look at the world through different lenses. The difficulty lies in that you have to abandon four or five assumptions about the world simultaneously. That's what probably makes it difficult.
On a list of ten things that matter in terms of how you look at the world, satisficing would be number one, along with the whole business of decision making under uncertainty. This opens up the idea that something which may seem at first glance to be completely irrational may in fact be a useful and highly effective non-catastrophic heuristic.
At around the same time as Herbert Simon was doing his work, David Ogilvy was talking to someone who ran the Chicago office of Ogilvy called Joel Raphaelson [Joel, who is still alive and as quick-minded as a 25-year-old, is the son of Sampson Raphaelson, scriptwriter for The Jazz Singer and Heaven Can Wait]. David agreed with Joel’s idea that people bought brands to avoid badness rather than to maximize perfection. They bought brand A over brand B not because they thought it was better, but because they were more certain it was good.
The idea is that when you make decisions in an uncertain setting, you have to care about not only the expected outcome, but also the possible variance. We'll pay a premium not only for "better," but for "less likely to be terrible." That seems to be an important thing to understand when analyzing decision making.
Human decision making is also pretty path-dependent. In one case in my life I've been able to profit from this. I live in a house, which in the UK is something called Grade 1 listed. It's by the great eighteenth century Robert Adam, and the grounds are by Capability Brown. I'm in a four bedroom flat on the roof of a house built for the doctor of George III in about 1785. For a time it was the home of Napoleon III.
I didn't pay anything extra for the architecture or the genius of the landscaping because nobody places that very high on their list of priorities when they buy a house. I asked our next-door neighbor, an economist, how much he thought we paid for this property relative to a property in an identical location of the same size by an indifferent architect. In other words, what's the premium we pay for the Robert Adam-ness of it? He said somewhere between zero and about 5 percent.
That's quite interesting if you think about it. When we buy a property, the order in which we look at things places location as the highest priority. Next. In the UK, it might be the number of bedrooms it has (in the US, it might be the floor area, by square footage). We might then look at the size of the garden, a few other features, and whether it has a pool. But architecture generally comes pretty low down the list. We only look at architectural aesthetics when we've got down to a final selection of four or five
.
Whereas a painting by a great artist might cost literally 10,000 times more than an equivalent-sized painting by an indifferent artist, a building by a fantastic architect costs about 1-3 percent more than a building by an average or even indifferent architect.
If we bought paintings the way we bought property, we'd say, "I want a painting that's exactly this size; I want these three colors to predominate; I want it to be in exactly these proportions." In the fifth iteration or so, we'd get down to who the artist was. Most of the time, we wouldn't end up with a Picasso. It seems to me that architecture is an incredibly cheap way of buying art, compared to art.
If you're interested and want to take advantage of this, go to a website in the US...MUCH MORE
called savewright.org, which shows Frank Lloyd Wright properties for sale. In most cases, they seem to be no more expensive than the neighboring property. Similarly, there was a Gropius flat that came for sale in the UK. It was expensive because it was in Notting Hill, but no more expensive than a totally average building next door. What intrigues me about human decision making is that there seems to be a path-dependence involved—to which we are completely blind.
Number two? Costly signaling theory is also pretty useful. I suppose the peacock's tail is the standard view. What seems undoubtedly true is that humans, like peahens, attach significance to a piece of communication in some way proportionally to the cost of generating or transmitting it. Instinctively, you will open the FedEx package on your desk before you open the letter. One of the problems of email is there's no cost attached to sending it, so we don't have a useful heuristic for deciding what to read first. That strikes me as interesting.
Cost might mean anything from financial expense to use of a scarce resource—anything that requires something in scarce supply, whether it's money, talent, effort, or time. The more that is invested in the communication, essentially, the more weight that communication carries. That makes perfect sense because, in some ways, that means that your sincerity is hard or costly to fake. That could also apply to creativity—the effort required to communicate humorously, which you have invested up front, connotes something about the sender’s intent.
Let me give you an example. You receive two wedding invitations on the same day, one of which comes in an expensive envelope with gilt edges and embossing, and the other, which contains exactly the same information, is in the shape of an email. You're probably going to go to the first wedding. (The second one, well, there's a dangerous implication there might be a cash bar.) Now, what happens if you haven't got much money, but you want to do an impactful wedding invitation? Then you make it really creative.
If you can't put actual money into the paper or the printing. What you can put in is something different, which is imagination. You can make it a fantastically imaginative or beautiful [or humorous] wedding invitation.
But there has to be some investment of a scarce, costly thing. It's the difference between saying your horse is going to win and visibly betting on your horse. In the latter case, you have skin in the game; in the former case, you don't. That's important to understand. To some extent, effective communication will always require some degree of inefficiency because if it's perfectly inefficient, it then becomes meaningless.
There's a rather lovely company in the UK that pays people who are housebound—whether for medical reasons, or are caregivers—to handwrite envelopes and letters. You could regard this as a very silly thing to do, but in costly signaling theory terms, it makes perfect sense. The open rate of these letters, and the response they generate, is an order of magnitude higher than for laser-printed letters.
Another thing worth bearing in mind is countersignaling, which, unlike signaling, seems to be uniquely human. There aren't cases of peacocks who demonstrate their extraordinary genetic quality by having really shitty tails. What seems to happen with humans is you have multiple parallel status currencies, and quite often you will signal your position on status by adopting none of the status currencies of the class immediately below your own, or by essentially demonstrating zero effort in standard status currencies. An unwashed bass guitarist in a cool rock band, for example, can get away with poor levels of hygiene, which signals: "I'm so sexy by dint of my bass guitar playing skills that I can get away with not making an effort in any of these conventional areas." Sometimes it's done as a positional thing, and sometimes it's done as a pure demonstration of handicap.
Relevance theory [from Dan Sperber and Deirdre Wilson] might be another thing that's interesting. In other words, replacing the “conduit” idea of communication with this idea that we communicate the minimum necessary for the recipient to recreate the message within their own head using context as a very large part of the information. Those interesting new theories of communication, which don't always sit with the Claude Shannon theories, are worth exploring. A very simple manifestation would be jokes which, like IKEA furniture, demand some self-assembly on the part of the recipient....
We've visited Mr. Sutherland a few times, among the more interesting:
Ogilvy & Mather UK Vice-Chairman, Rory Sutherland, Talks Behavioral Economics
Ogilvy & Mather UK Vice-Chair Rory Sutherland on Driverless Showers
