On the Road with Michael Shermer
(Or, The Chronicles of Skeptica) Part 2
[webmaster broke last week's post into two parts and added new photos to this part]
Day 2. November 8, 2008
“Memo to all American speakers: At some point during your talk please apologize for George W. Bush and make a joke about his stupidity, then thank God for Obama (even you atheists) and mention that you voted for him.” Although no such paper memo was distributed to the speakers, by the second day I began to wonder if it was a tacit agreement nonetheless, since nearly everyone did it. Except me.
On this day the German ethologist and evolutionary psychologist Gerd Gigerenzer, author of the excellent book, Gut Feelings, began with a funny story about an economics professor who was struggling to decide if he should take a new job position at another university, when a colleague told him to just compute the value and diminishing marginal utility of each option and then calculate the decision, “just like you teach your economics students to do.” The professor’s response: “Oh, come on, you don’t understand, this is serious!” His point was that when it comes to real life most of us make most of our decisions under great uncertainty. We use our gut feelings instead, and more often than not that works just as well as complex models. Gigerenzer’s most notable example was an economist (I believe it was Harry Markowitz) who received the Nobel Prize for his complex model of how best to make investments, but when it came to his own portfolio Markowitz reverted to a simple 1/n formula of the equal distribution of funds over a large number of investment tools.