The past month or so I’ve been reading Taleb’s Black Swan again, now for the second time. I’m very much impressed by his ideas, and the forceful in-your-face way that he writes. It’s certainly not a surprise that the book has captivated the minds of traders, businesspeople and other practitioners. The book is extremely good, even good enough to recommend it as a decision making resource. Taleb finds a cluster of biases (or more exactly, puts together research from other people to paint the picture), producing a sobering image of just how pervasive our neglect of Black Swans is in our society. And, he’s a hilariously funny writer to boot.

But.

Unfortunately, Taleb – like everyone else – succumbs in the same trap we all do. He’s very adept at poking other people about their biases, but he completely misses some blind spots of his own. Now, this is not evident in the Black Swan itself – the book is very well conceptualized and a rare gem in the clarity of what it is as a book and what it isn’t. The problem only becomes apparent in the following, monstrous volume Antifragile. When reading that one a few years ago, I remember being appalled – no, even outraged – by Taleb’s lack of critical thought towards his own framework. In the book, one gets the feeling that the barbell strategy is everywhere, and explains everything from financial stability to nutrition to child education. For example, he says:

I don’t know about you, but I really find it hard to derive “no biking” from the barbell strategy.

​Ok, back to seeking out irrationality. Taleb certainly does recognize that ideas can have positive and negative effects. Regarding maths, at a point Taleb says:

My instant thought when reading the above paragraph was: “well, what about the areas where Taleb’s thinking totally blows us up?”

Now the point is not to pick on Taleb personally. I really love his earlier writing. I’m just following his example, and taking a good, personified example of a train of thought going off track. He did the same in the Black Swan, for example by picking on Merton as an example of designing models based on wrong assumptions, and in a wider perspective of models-where-mathematics-steps-outside-reality. In my case, I’m using Taleb as an example of the ever present danger of critiquing other people’s irrationality, while forgetting to look out for your own.
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Now, the fact that we are better at criticizing others than ourselves is not exactly new. After all, even the Bible (I would’ve never guessed I’ll be referencing that on this blog!) said: “Why do you see the speck that is in your brother’s eye, but do not notice the log that is in your own eye?”
In fact, in an interview in 2011, Kahneman said something related:

If I interpret this loosely, it seems to be saying the same thing as the Bible quote – just in reverse! Kahneman seems to think – and I definitely concur – that seeing your own mistakes is damn difficult, but seeing others’ blunders is easier. Hence, it makes sense for organizations to try to form a culture, where it’s ok to say that someone has a flaw in their thinking. Have a culture that prevents you explaining absolutely everything with your pet theory.

Okay, so I promised to reveal my own results for the last week’s Rationality test, and also take a deeper look at the questions while I’m at it. So here goes.

You might guess that – based on the fact that rationality is a big theme of this blog – I would receive the score “Rationalist”. Well, you’d be half right. When I was trying out the beta version of the test (with slightly different questions I think), I got “Skeptic”. Also, the more rationalist result of the second try was a lot due to the fact that for some questions I knew what I was supposed to answer. I guess this shows there’s still room for improvement. Anyway, so what are you supposed to answer, and why? I’ll go through the test question-by-question, providing short explanations and links to relevant themes or theories. At the end, I’ll show how the questions relate to the skills and sub-categories.

Question-by-question analysis

1. LA movieWell, this is just a classic case of sunk costs. You’ve invested time and money into something, but it’s not bringing the utility (or profit, or whatever) that you thought. If you abandon it, you abandon all chance of getting any utility out from the investment. However, as far as rationality is concerned, past costs are not relevant, since you can’t affect them anymore. The only thing that matters is the opportunity cost: should you stay in the movie, or rather do something else. If that something else brings more benefits, rationally you should be doing that.

2. Music or jobThis problem is a classic case of how to confuse your opponents in debates. You can see this in politics, like suppose you’re talking about school shootings with a hard-line conservative: “Either we give guns to teachers or we lower the right to bear arms to 8 years old!”. Well, of course you see right away that you’re being presented a false dichotomy: there are many other ways to prevent shootings – like banning all arms altogether. But to skew the debate and try to put you in a position in which you have to accept something you don’t like, your opponent tries to lure you into the these-are-the-only-two-options trap.

3. Doughnut-making machineNow, this question is basically just simple arithmetic. However, the trick here is that the answer that immediately comes to mind is incorrect, ie. a false System 1 response. Instead, what you need to do is to mentally check that number, see it is wrong, and use System 2 to provide the right answer. The question itself is just a rephrase of one question in the classic Cognitive Reflection Test.

4. Fixating on improbable frightening possibilities
I’m a little puzzled about this question. Sure, I understand the point is that if you’re always fixating on really unlikely bad things, you’re doing something wrong. Still, I find it hard to see anyone would actually be like this!

5. The dead fireman
Now, the point in this question was to see how many possible causes you would think of before deciding on one. The idea is, naturally enough, confirmation bias. We’re too often thinking of a certain explanation, and then immediately jumping to look for confirming evidence. In complex problems, this is a special problem since as we all know, if you torture the numbers enough with statistics, you can make them confess to anything.

6. Things take longer
Well, I presume this simple self-report question is just measuring your susceptibility to the planning fallacy.

7. Bacteria dish
This question has the same idea as the Doughnut-making machine. You get a System 1 answer, suppress it, and (hopefully) answer correctly with System 2. This question is also a rephrase of a question from the Cognitive Reflection Test.

8. Refuting arguments
Being able to argue against other people is a clear sign of rhetorical skills and logical thinking.

9. Budgeting time for the essay
This question checks the planning fallacy. Often, we’re way too optimistic about the time that it takes to complete a project. For example, I’m still writing a paper I expected to be ready for submission in May! In this question, you were awarded full points for assigning at least 3 weeks for the essay, ie. the average of the previous essay completion times.

10. Learning from the past
This is a simple no-trick question that honestly asks whether you learn from your mistakes. I honestly answered that I often do, but sometimes I end up repeating mistakes.

11. BacoNation sales and the ad campaign
This checked your ability to use statistical reasoning. True enough, sales have risen compared to the previous month, but all in all the sales have varied enough to make it plausible that the ad campaign had no effect. In fact, if you pnorm(44.5, mean(data), sd(data)), you get 0.12167, which implies that it’s plausible the September number comes from the same normal distribution. This makes the effect of the ads only somewhat likely.

12. Sitting in the train
So this is the first of the two questions that check how much you value your time. Of course, the point here is that you ought to be consistent. Unfortunately, there may be valid arguments for claiming that you value time on holiday and at home differently, due to differing opportunity costs. See question 20 below for more explanation.

13. Value of time
This question simply asks whether you find it easy or difficult to value your time. Unsurprisingly, the easier you find it the higher your points.

14. One or two meals
Would you rather have one meal now or two meals in a year? This is measuring the discounting of time. Assuming that you’re not starved of food, you presumably should discount meals in the same way as money, since money can obviously buy you meals. See question 21 below for a longer explanation.

15. Continue or quit
Another one of those self-report questions, this is basically asking whether you have fallen into the sunk cost trap.

16. 45 or 90
Here’s another question about time discounting, this time with money. The same assumptions hold as before: we’re assuming you are not in desperate need of money. If that holds, you should discount the same way over all time ranges.

17. Certainty of theory
Can a theory be certain? If you’re a Bayesian (and why wouldn’t you be, right?), you can never set a theory to be 100% certain (let’s ignore tautologies and contradictions here). In a Bayesian framework this would mean that no matter what evidence you observe, the theory can never be proven wrong, because a prior of 1 discounts any evidence for or against it.

18. 100 vs 200
Another discounting question, this time with slightly different amounts of money. Once again, you should discount the same way and choose whatever you chose before. Note that here we are also assuming that 100/200 amounts are close enough to the 40/90 decision – if we had amounts in the millions, that might make a lot of impact.

19. Big assignment
The big assignment vs. small assignments is just a self-report measure to investigate your planning skills.

20. Paying for a task
This question is a sister question to the one where you’re sitting in the train. I presume that the point is that your valuation of one hour should be the same in both question. However, we can question whether the situations are really the same. In one, you’re one holiday, and sitting in a train in a new city has positive value for me. What’s more, on holiday the opportunity costs are different. I’m not really trading off time for working hours, because the point of the holiday mindset is precisely setting aside the possibility of work, so I can enjoy whatever I’m doing – like sitting in a train in a new city. In this question, you’re trying to avoid a task at home, where the opportunity costs of one hour may certainly be different than when you’re on holiday. For example, if you have a job you can do from home, you could be working, or going out with friends, etc.

21. 45 or 90
Well, this is of course part of the other time discounting questions. Here we have the same 45/90 amounts, but the time has been shifted for one year to the future. Again, you should choose whatever you chose before.

All these questions had the similar format:
A dollars in time t vs. B dollars in time t+T

If you’re perfectly rational, you should discount in the same way between times [now, 3 months] and [1 year, 1 year 3 months]. The reason is quite simple: if you’re now willing to wait for the extra three months but not when the lower amount is immediate, you will in the future end up changing your decision. And, if you already know you will change it, why wouldn’t you choose that option already. Hence, you should be consistent. (if you really need an academic citation, here is a good place to start)
 
The score
 So how do these questions make up your score?
If you look at the URL of your results report, you probably see something like
https://www.guidedtrack.com/programs/1q59zh4/run?normalpoints=33&sunkcost=4&planning=3&explanationfreeze=3&probabilistic=4&rhetorical=4&analyzer=3&timemoney=4&intuition=14&future=14&numbers=16&evidence=14&csr=8&enjoyment=0&reportshare=0
You can use that to look at your score by category, for example in my case:

That’s all for this week, happy rationality (or rationalizing?) to all of you! :)

As a decision scholar, I’m a firm believer in the benefits of specialization. If someone is really good at doing something, then it’s often better to rely on them in that issue, and focus efforts towards where you’re personally the most beneficial to others and society at large. Of course, this principle has to apply over all agents – including myself. With that in mind, I’m going to make a feature post about something a certain someone else does – and does it much better than me.

Enter Spencer Greenberg. I’ve talked to Spencer over email a couple of times, and he’s really a great and enthusiastic guy. But that’s not the point. The point is that he does a great service to the community by producing awesome tests, which you can use to educate yourself, your partner or anyone you come across about good decision making. What’s even better is that the tests are done with the right kind of mindset: they’re well backed up by actual, hard science. What this means is that the questions make sense – there’s none of that newspaper-clickbait “find your totem animal” kind of stuff. There’s proper, science-backed measuring. Even better, the tests have been written in a way anyone can understand. You don’t need to be a book-loving nerdy scholar to gain some insights!
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Now, I’ve always wanted to bring something to the world community. And a while ago, I thought maybe I could produce some online tests about decision making. But after seeing these tests, I’ll just tip my hat and say that it’s been done way better than I ever could have! Congrats!
And now, enough of the babbling: go here to test yourself! (For comparison, a reflection of my results can be seen in next week’s post :)