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Tank General

general, Thinkingtanks.com

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Are humans irrational? If so, how can we build stronger institutions to compensate for human shortcomings in rationality?

David Ropeik argues that "The brain is only the organ for which we think we think. It's job is not to win noble prizes. And to pass math tests. It's job is to get us tomorrow. Its a survival mechanism.. and it plays a lot of tricks in order to get us to tomorrow. That worked pretty well when the risks were lions and tigers and bears… Its not as good when we need to rationalize and reason and use the facts more with the complicated risks we face in a modern age: climate change, genetically modified food, and unsustainable living on the planet.. That takes a lot more thinking. More cognitive, slow,more effortful thinking. That we are not instinctively built that way must be recognized if we are going to get beyond the risk of not being built that way."

http://www.youtube.com/watch?v=GDAzsZLvfPw

Dan Ariely provides further evidence that humans have irrational cognitive thought in his TedTalk and offers the following, "If we have these predictable, repeatable mistakes in vision, some thing that we are good at, what's the chance that we don't make more mistakes at something we're not as good at? For example financial decision making. Something we don't have an evolutionary reason to do, we don't have a specialized part of the brain, and we don't do that many parts of the day. The argument is that in those cases we make many more mistakes.."

In another TedTalk Dan Ariely provides the following food for thought, "Are we superman or are we Homer Simpson? When it comes to building the physical world we understand our limitations and we build around it. But for some reason when it comes to the mental world when we design things like healthcare, retirement, and the stock market we somehow forget the idea that we are limited. And i think if we understood our cognitive limitations in the same way that we understand our physical limitations we could design a better world."

Do you agree with them? How do we better structure institutions that can compensate for our shortcoming?

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  • Nov 13 2012: It is a fallacy to make a connection between the way out brain interprets sight and the way you manage your finances. Although I agree that people make irrational decisions on a regular basis the fact that you see things differently than they are draws a false metaphor.
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      Nov 14 2012: Seeing things differently than they are when you know how they really are is irrational, right?
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      Nov 14 2012: Hi Ean,

      Are you refering to the entire congnitive process of visual perception? or is it a more general statement regarding connecting something a person sees and the way they manage their finances?

      If the second, have you read about the anchoring effect? how would that NOT affect the way somebody manages their finances?

      cheers
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      Nov 18 2012: I think Dan Ariel's point in drawing the comparison to congnitive process of visual perception was only that our brains can be easily tricked. But feel free to expand on why you disagree.

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