Beating the Bias Trap (Additional Resources)

When I attend presentations of various sorts, I am often frustrated in that I want to try to take in and engage with what is being presented but I also want to take careful notes, especially with respect to direct sources. I also want to be able to check these and other related sources out for myself, both to “check the work” and to gain further understanding. Since I am presenting “Beating the Bias Trap” at FPA – NorCal in San Francisco on Tuesday, what follows is my list of direct sources and other materials relating to my subject. My goal is to help attendees get the most out of my presentation as possible. The list and its topics generally follow the order of my presentation. I trust that attendees will find it useful and that others interested in the subject will find some helpful materials.

Homo Economicus is a Myth

• From “Economic Man” to Behavioral Economics (Justin Fox)
• How Homo Economicus Went Extinct (The Wall Street Journal)

Checkershadow Illusion (MIT)

False Memories

• Seamon, Luo & Gallo, Creating False Memories of Words With or Without Recognition of List Items: Evidence for Nonconscious Processes
• The Innocence Project

Placebos: Benedetti, Maggi, Lopiano, Lanotte, Rainero, Vighetti & Pollo, Open versus hidden medical treatments: The patient’s knowledge about a therapy affects the therapy outcome

The Math Problem

• Romer, Mathiness in the Theory of Economic Growth
• We Suck at Probability
• We Suck at Math
• That’s So Random

The Behavior Gap

• The Behavior Gap (Carl Richards)
• Mind the Gap 2014 (Morningstar)
• Quantitative Analysis of Investor Behavior (QAIB)(Dalbar)

We See What We Expect to See

• Truthiness (The Colbert Report video)
• Carolina Crazy (Confirmation Bias)
• Investors’ Ten Most Common Behavioral Biases
• Crash Ahead!!!

Clan and Team Loyalty

• My Oscar Picks (Pauline Kael quote in The New Yorker)
• Sherif, A study of some social factors in perception
• McDermott, Tingley & Halemi, Assortative Mating on Ideology Could Operate Through Olfactory Cues

Pattern-Seeking

• Daniel Kahneman, Thinking Fast and Slow
• Buschman & Miller, Top-down versus bottom-up control on in the prefrontal and posterior parietal cortices
• Investment Illusions

Optimism Bias

• We Was Robbed
• Missed It By *This* Much
• DeJoy, The optimism bias and traffic accident risk perception
• The Optimism Bias (Time)
• Lovallo & Kahneman, Delusions of Success: How Optimism Undermines Executives’ Decisions

Risk Aversion

• The Planning Fallacy
• That’s right, the women are smarter
• Risk Capacity, Appetite, Tolerance and Perception

Bias Blindness

• Bias Blindness and Political Polarization
• Why people believe things you don’t believe (Boing Boing)
• Laugh or Cry?
• Bias Blindness

The Narrative Fallacy

• Beguiled by Narrative
• Joe Walsh and the Narrative Fallacy
• Hedge fund investors and the narrative fallacy – data from here
• Fooled by Experience (Harvard Business Review)

Smart People are More Susceptible to Bias

• West, Meserve & Stanovich, Cognitive sophistication does not attenuate the bias blind spot. Journal of Personal and Social Psychology
• Samuel Arbesman, The Half-Life of Facts
• Ideological Through-and-Through
• Data-Driven Difficulties
• Myopinion

Improving Decision-Making Odds

• Brian Portnoy, The Investor’s Paradox: The Power of Simplicity in a World of Overwhelming Choice
• Can There Be Too Much Choice In a Retirement Savings Plan? (Vanguard)
• A Full Night’s Sleep Can Really Pay Off—in Salary and Investments (The Wall Street Journal)
• Harrison & Horne, The impact of sleep deprivation on decision-making: a review
• Make Fewer Decisions
• Dijksterhuis, Bos, Nordgren, & van Baaren, Complex choices better made unconsciously?
• Better Behaved Behavioral Models (Big Think)
• Admiral William H. McRaven Commencement Address (YouTube)
• Kim Vincente, The Human Factor: Revolutionizing the Way People Live with Technology
• Richard Thaler, Misbehaving: The Making of Behavioral Economics
• Leaders as Decision Architects (Harvard Business Review)
• Heitz, The speed-accuracy trade-off
• Outsmart Your Own Biases (Harvard Business Review)

Focus on Process

• Atul Gawande, The Checklist Manifesto: How to Get Things Right
• Process and Performance
• Five Stinkin’ Feet
• Gaming the System
• Gaming the Numb3rs
• Emphasize Process

Long-Term Thinking

• A New Kind of Investment Outlook
• The Long Now Foundation

Critical Thinking

• Willingham, Critical Thinking: Why Is It So Hard to Teach?
• Maria Konnikova, Mastermind: How to Think Like Sherlock Holmes
• Feynman, Cargo Cult Science

Data-Driven Investing

• How Digital Transparency Became a Force of Nature (Scientific American)
• Everybody Plays the Fool (Sometimes)
• The Value Proposition
• Just Put the Ball in Play

Focus on What Doesn’t Work

• A New Kind of Investment Outlook
• Mistakes (Shane Parrish)
• An Important Life Lesson from Blackjack and Baseball (Slate)

Aligned Interests

• Cremers, Driessen, Maenhout, & Weinbaum, Does Skin in the Game Matter? Director Incentives and Governance in the Mutual Fund Industry
• Motivated Reasoning

Being Methodical

• Collins & Hansen, Great by Choice: Uncertainty, Chaos, and Luck–Why Some Thrive Despite Them All
• Atul Gawande, The Checklist Manifesto: How to Get Things Right

Pre-Mortem

• Luchins & Luchins, The Einstein-Wertheimer Correspondence on Geometric Proofs and Mathematical Puzzles
• Performing a Project Premortem (Harvard Business Review)

Accountability

• Shu, Mazar, Gino, Ariely & Bazerman, Signing at the beginning makes ethics salient and decreases dishonest self-reports in comparison to signing at the end
• Colan & Davis-Colan, The Circle of Consequences: The Importance of Accountability

Collaboration

• Steven Johnson, How We Got to Now: Six Innovations That Made the Modern World
• Whiteout (Chief Investment Officer)
• Sunstein & Hastie, Wiser: Getting Beyond Groupthink to Make Groups Smarter
• Joshua Shenk, Powers of Two
• How Bill Gross and Pimco got too big for each other (The Los Angeles Times)
• The Trade that Led to the Demise of PIMCO Total Return (Pragmatic Capitalism)
• Crackpots Work Alone
• Not So Foolish (Aeon)
• Kahneman & Klein, Conditions for intuitive expertise: A failure to disagree
• Atul Gawande writes about “error culture” in this article (data here)

Red Team

• Michael Mauboussin, The Success Equation
• Who’s the Easiest Person to Fool?
• There’s No Substitute for Good Judgment

Key Questions

• How might I be wrong?
• Have I considered the strongest renderings and arguments of opposing viewpoints?
• Have I given opposing views a fair hearing?
• Have I checked and re-checked my work, data and assumptions?
• What does the available data say and suggest?
• What would it take to convince myself otherwise?
• What do I have to gain (or lose) by changing my mind?
• What do the (other) experts say?
• What do I see/know/get that those who disagree with me don’t?
• What’s in it for me?
• What’s in it for them?
• What do my best and smartest colleagues (friends) say?
• Have I considered the most generous versions of opposing arguments?
• Can I argue the other side effectively?
• Do I fully understand the most powerful elements of opposing viewpoints? HINT: If you think those who think otherwise are stupid, delusional or evil, you probably don’t.

The Semmelweis Reflex