Monday, August 2, 2010

Laurie Santos: How Monkeys Mirror Human Irrationality

Filmed and Posted July 2010 on TED
Why do we make irrational decisions so predictably? Laurie Santos looks for the roots of human irrationality by watching the way our primate relatives make decisions. A clever series of experiments in "monkeynomics" shows that some of the silly choices we make, monkeys make too.


  1. I like the experiment, but I'm not sure it really demonstrates the broad conclusions that she thinks it does, even though I'm personally inclined to agree.

  2. Not sure this shows what she thinks it shows.  At the end of the video, I was also thinking about how these 'flaws' in human thinking - which causes stockbrokers to hold onto declining stocks, and homeowners to avoid selling when a house has lost money - actually contributes to the stability of the entire system.  When stockbrokers hold onto declining stocks and homeowners avoid selling in a down market, they're actually helping to support the prices.  If, on the other hand, they sold, then the stock market and housing market would experience deeper declines, and you'd get larger fluxuations in the market.  You'd also get sudden outbreaks of selling that would cause stock and housing prices to plumet.  Just a few months ago (in May 2010), we saw the stock market suddenly drop by a thousand points over the course of a few hours.  When stockbrokers hold onto declining stocks, it helps to avoid those kinds of events.

    Given that context, she might want to rethink whether or not it's a good thing to try to eliminate these 'flaws' in our thinking.  Even further, as machines are more and more involved in making buy and sell decisions on the stock market, we might run into more of these problems, due to the computer's lack of 'cognitive bias'.

  3. Great talk. But reminded me that statistics are not obvious for humans, as it is beautifully exemplified by the Monty Hall problem. The way she talks about the losing and gaining situation is as if they were the same. Are they really? In the long run.... 1.000.000... times what is better, safe or risk? It seems to me that consistently getting 2 grapes out of the 3... or gettinig 1 or 3 by the flip of a coin... it should not make much difference. Maybe that was not the best example, but anyways she had to say all that in only 20min and I have not read her work yet but seems fascinating.

  4. Pedro, the difference was not in taking risk versus not taking risk. The odds and the choice were always identical. It was merely the perception of the situation that was changed. The change in perception lead to difference choices being made.

    To be specific, the example at the beginning was along these lines. Either
    1. You receive 1000 and choose to get 500 or get 1000 with 50% chance. Or
    2. You receive 2000 and choose to lose 500 or lose 1000 with 50% chance.

    Identical setup, yet people had different preferences.  Each individual might have different levels of risk aversion, but that's irrelevant, and they should be choosing the same level or risk in either of the identical setups.

    There are many examples like this.