Think Twice

Michael J. Mauboussin’s book “Think Twice: Harnessing the Power of Counterintuition” makes us think twice. A chief investment strategist and adjunct professor of finance at Columbia Business School, Mauboussin claims that intelligent people do not always make intelligent decisions.
According to the author, no one intentionally makes bad decisions. However, many decisions that initially seem reasonable might lead people to disaster. He analyzes and classifies major mental traps in decision making. In the first chapter, he tells the story of the race horse Big Brown. The horse’s past is full of victories. Big Brown won all of the races she took part in and was predicted to be the champion in her next race, as she was the favorite horse to win that race. Surprisingly she finished in last place. This story describes our tendency to consider each problem as unique rather than considering carefully the experience of others. In the history of this big race, there had been very fast and strong horses like Big Brown in the past, and only one in twenty had been the champion. But instead of focusing on the individual story of the champion, we could have looked at the past of all the others. Do you think your phone number can influence your decisions? The author carried out a simple experiment in his classes. He asked students to write the last four digits of their phone numbers and then to guess the number of doctors in New York. The students with smaller digits in their telephone numbers estimated a lower figure for the number of doctors and students with bigger digits in their telephone numbers estimated higher figures for the number of doctors. Our minds want to reduce the options at times when we should keep alternatives open. In chapter three, he questions the use of experts. An expert might be specialized and better than an ordinary person in his or her field, but the mind of non-experts is better than the expert’s mind. He gives the example of Netflix, a DVD rental company in the United States. Netflix uses an online platform to survey the opinions of Netflix members about their movies. The movies with the highest scores from clients are rented more often. No expert’s opinion is as powerful as the opinions of thousands of people. Netflix employees could function as experts, however, they would then reflect their own taste in their advice and suggestions. With a very charming example, the author also underscores the critical role of context in decision making. As much as we like to think of ourselves as objective, the behavior of those around us exerts an extraordinary influence on our decisions. He called this concept “situational awareness.” In a restaurant, if French music is playing in the background, people are likely to order French wine; however, if the music is German, people are more likely to order beer. One of the interesting points made in the books is about luck and skill. A lot of people like to explain some success or failure by luck or by skill. One of my closest friends used to believe that there is nothing called luck; for that particular friend of mine there is only hard work. And some people prefer to explain everything through luck. Mauboussin offers an alternative explanation. According to him, there are cases where luck has no importance like chess. However, there are cases like mountaineering where the probability of an avalanche falling cannot be avoided through hard work; it is by luck. Mauboussin provides very interesting examples to make the subject clearer. It is a good book that allows us to evaluate our decision-making process.