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The college admissions admission

We’re not really sure on the origin of Hanlon’s Razor, but the speculation (via Wikipedia) is Robert Heinlein’s (Heinlein ->Hanlon) story, Logic of Empire, “The character ‘Doc’ in Heinlein’s story described the ‘devil theory’ fallacy, explaining, ‘You have attributed conditions to villainy that simply result from stupidity.'”

I’d remember it more and confuse it less if we stuck with ‘devil theory’ fallacy.

What does stupidity mean though? Most people aren’t dumb, despite our experiences. Most of us error by attribution. And, anyone alive today is the best evolutionary fit! Keep in mind it’s the cream of the crop (for fit) we’re dealing with.

Most of stupidity is wrong-person, wrong-time, wrong-place. In Unnaccaptable, the book about the college admissions scandal, there are a lot of people who broke a lot of laws, most of them stepping from a gray area to a black one.

My daughters (12, 10) aren’t near college applications, but we have been in school for seven years and have helped a lot. We buy supplies, email teachers, advocate to staff, volunteer at the school, attend events, and so on. There’s parental pride, there’s ego, and there’s that unending love parents feel, a willingness to do anything.

Then there’s the chance. Are you willing to do anything?

One minor character from the book is Gordon Caplan, a lawyer who in 2017 did pro bono work to help an Iranian child get admittance to the United States for emergency eye surgery. He told one another interviewer, “I never wanted to do anything that couldn’t be on the front page of the WSJ.”

Yet he crossed from gray to black. From Unacceptable, “I blame no one but myself. I am only angry at myself, I am not even angry at Rick Singer. he was selling something I never should have bought.”

Consider the moment. Consider the step. You’ve helped your kid in the past. You’ve paid for tutors, access, and school. You’ve done the leg work and the research. Then you’re in. You’ve taken the step and everything that got you here gets a further boost. Commitment tendencies kick in. Sunk-costs weight. Status-quo bias lends a hand to head onward and not turn back.

The lesson from Unacceptable is that conditions matter. The heart of Hanlon’s Razor is that conditions matter. This is good.

When Dan Ek spoke with Patrick O’Shaughnessy he clarified the contrast between Spotify and Netflix. ‘No’, Ek explained, Spotify is not just doing what Netflix is doing to avoid wholesale transfer pricing. It’s not that simple. “Unless you understand the system, you can’t just take one of the concepts out of it and expect it to work in your company.”

Conditions matter.

The master of noting how and when things change is Rory Sutherland and his output is Alchemy. Sutherland’s suggestion is that framing something using words is cheap compared to the potential value increase. Consider work from home. When Rory told his team of fifteen they could work from home nobody did. Why? “Instinctively they saw it as a concession. Every time they took advantage of this they were burning reputational air miles.” They viewed it as an exchange. However, when Sutherland mandated a day the exchange went away.

Unacceptable was a great book about an interesting moment filled with characters who made mistakes and should answer for their actions, but the central lesson is the malleability of people.

Another idea present in Unacceptable was covered in the pay-what-you-want notes about Tyler Cowen. One covered Cowenism is to solve for the equilibrium, a prompt to consider how a situation might play out. The college admission scandal provides a nice example to think that through.  

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Cowen’s Chow Choices

One local topic during COVID has been motor homes. Some fellow dog walkers want one, some don’t. The obstacle, as often the case, is cost.

A few friends have them and universally they mention the deal they got. It was either a family friend, a distressed seller or a trade-up-buy-out-sale. For us, the math doesn’t work. Thirty-thousand dollars is a lot of nights at a Hampton Inn.

“Buying good things can’t be the secret to success in investing. It has to be the price you pay. It’s not what you buy, it’s what you pay. There’s no asset so good it can’t become overpriced.” – Howard Marks

Great rewards come where value diverges from price. This is the moneyball insight. This is the JTBD insight. This is Tyler Cowen’s Dining Guide insight too.

Where are the wrong metrics being used?

Consider the name of a restaurant suggests Cowen. Would you eat at an Ethiopian restaurant called EYO Sports Bar? Cowen commented: “When I heard that name I thought, this place must be great. When Americans want to eat Ethiopian food what kind of name are they looking for? The Red Sea? Queen of Sheba? Fine. But when it’s EYO Sports bar you know it’s really for Ethiopians.”

In general, better food will be at places with bad names.

Also avoid places on the beaten path, full of beautiful people, and with famous chefs. These are all metrics some people use to choose a restaurant but that don’t necessarily contribute to the quality of the food. It might be good food, but won’t be a good deal.

Instead, use the economic Cowen espouses. Like the name Rus-Uz, a place that serves Russian and Uzbekistan food (and caters!) in Arlington Virginia. Ask, “‘What is the appeal to the masses?’ In relative terms it’s the Russians, so of course that means the Uzbek dishes are better.”

One way to think about metrics is to consider anything that has been quantified, counted, or numbered. It’s easy to count units but hard to count quality.

Part of the reason personal productivity has been an internet subject for so long is that it’s hard to measure. How does someone measure their work? Ask anyone who creates content online and they’ll tell you that it’s the oddest posts that get shared the most. The best productivity advice might just be: don’t give up.

Like this idea? Read more here.

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Large N Small p

Is it more likely for an infected football player to transmit a disease to their teammates or their competition? Adi Wyner:

"I would expect intrateam transmission by far. Not only huddle time, but the time on the bench, in the locker room, and while they travel. It’s a small chance of any given pairing but it’s lots of pairs. Anytime you multiply a large number by small odds you get a large number."

That’s via Wharton Moneyball and demonstrates the large N, small p principle. It’s the idea behind TikTok too. Ben Thompson said:

"What’s interesting thinking about Quibi and TikTok is that Quibi was such an arrogant idea, that professionally produced content is always going to be better. Are we sure about that? The vast majority of TikTok is garbage and that’s always the case with user generated content. But as it turns out, .1% of a massive, massive amount of content is super compelling. You find that one-percent not by being a picker, you find it by sourcing it."

Large N, small p is why something is always happening.

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What is cheating in chess is winning in life.

Roland Walker (BBC) talking with David Edmonds. The context is how Chess.com monitors cheating.

“We can’t overstress this enough, humans and computers play utterly differently. Humans play by planning and recognizing patterns. Computers play in unusual ways, it forgets everything that it knew in between every move. A computer doesn’t really have a plan.
“An engine will take back a previous move if it realizes that in the context of the following moves it wasn’t good. A human has a kind of sticky feeling about their plan.”

Chess engines make people better at chess and good players use them to practice, if not to play. It’s the Cowen idea of meta-rationality (more here). The idea of using the right resources.

Computers are good because they compute without bias (kinda) and avoid human mistakes like sunk cost. As Mohnish Pabrai pointed out, “when we spend a lot of time on something, we feel we should get something in return for that time, it’s a danger if you say, I’m going to research a company and decide if I want to invest or not. I think you’re better off researching a company with no such preconceived notion.”

This week my daughters (12, 10) and I watched both Sherlock (also BBC) and Enola Holmes (Netflix, we loved it). In both the episode and the movie, the characters had to be more objective to solve the crime.

However, it’s going full-Sherlock as much as moving in that direction. Like someone training to gain/lose weight, the goal isn’t to become extremely skinny/strong but to be more than the current state.

Meta-rationality then is under indexed, unless of course, it’s outlawed like chess.

h/t Cowen-kinda-queue, a podcast feed of Marginal Revolution mentions.

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The Philosophy of Fish

Internet Archive, mentioned here.

"Let us suppose that an ichthyologist is exploring the life of the ocean. He casts a net into the water and brings up a fishy assortment. Surveying his catch, he proceeds in the usual manner of a scientist to systematise what it reveals. He arrives at two generalisations:

(1) No sea-creature is less than two inches long.

(2) All sea-creatures have gills.

These are both true of his catch, and he assumes tentatively that they will remain true however often he repeats it.

In applying this analogy, the catch stands for the body of knowledge which constitutes physical science, and the net for the sensory and intellectual equipment which we use in obtaining it. The casting of the net corresponds to observation; for knowledge which has not been or could not be obtained by observation is not admitted into physical science."

The ichthyologist goes on to explain, "In short, what my net can’t catch isn’t fish."

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Moving the line of action

 

Buying gas for a vehicle is both easy (finding, doing, paying) and salient (gauges as well as low fuel warnings). People need no help to fill up. However, non-consumption occurs when something is perceived as too hard or unimportant. 

Consider the barnacles on your to-do list. The ones that get transferred to the new piece of paper or system or from physical to digital and back again. I’ve had items last longer than green bananas but the end is the same for both: buckle down and get it done (in the case of bananas, bake bread). 

Eventually you do roll up your sleeves, mentally brace yourself, and collect the necessary tools only to frequently find that dreaded task takes much less time than expected. If we’d known it was that simple we’d have done it much earlier. 

My wife and I bought a mattress from an online store. It’s fine. We ordered online because the perceived ease was greater, though we found out that Amazon (not where we ordered from) raises the bar for ecommerce and other companies often fall short. Amazon shifted the line of perceived ease for online orders well south of its actual location.

Business owners, volunteers, and persons on the internet can all shift the line by raising the salience and (perceived) ease. telling stories, structuring information, or bringing attention to a situation. The history of tuna demonstrates both these points. One year the California harvest of non-tuna was less than expected and fishers faced filling the tins another way. They caught larger fish, called it ‘chicken of the sea’ and packaged it with recipes pre-printed on the paper labels. ‘Hey’ the thinking went, ‘this is white meat too’. 

This model works as a way of thinking about the world but it only works as a model. There’s no Lego-style instructions. Rather, consider the JTBD for your customer, reader, team and find ways to be more salient and easier. 

In the pay-what-you-want short reading on Tyler Cowen, we highlighted how moon affiliation (wrong reasons, right or wrong outcome) shifts the action curve down. 

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What’s next to a cash register?

coffee lifestyle starbucks coffee shop
Photo by Adrianna Calvo on Pexels.com

Tyler Cowen is one of the most interesting and insightful thinkers sharing their wisdom today (and for the past decade-plus!). One of his ideas highlighted in our Twenty-Minute-Read on Cowen is to think of incentives and solving for the equilibrium.

To think like an economist, like Tyler Cowen, we should consider how things work within a market. Tim Ferriss asks Cowen what advice he would put up on a billboard? Tyler responds in an interesting, and quite different way, from what many of Tim’s other guests suggest.

Normally, this question tends to lead to something inspirational or tactical, something grand or granular. There’s also a bit of personal signaling in the answers where after an hour or so of talking to Tim, guests want to step off on the right foot.

Cowen flips the question and wonders: what works on billboards. Casinos advertise on billboards. So do lawyers and radio stations. Auto dealers advertise on the radio, which you listen to in your car, and notice how nice a new car might be. Cowen doesn’t answer Ferriss because there’s not a connection between that medium and his message, and mediums matter.

The same effect came up in the college admissions scandal book, Unacceptable. After dropping off kids, “moms in workout gear might pop into a local coffee shop, where the area near the straws and napkins was blanketed with ads for test prep services and tutoring companies.” If a college tutor, guide, or private counselor wanted to find upper-middle-class clients where better than a coffee shop?

Markets are dangerous for entrepreneurs because they lead to competition. However, markets are instructive for economists, or people who want to think like them, because they lead to understanding. During his lunch with the FT, Cowen said that he looks for Ethiopian restaurants located near other Ethiopian restaurants because “competition works.”

The biggest lesson from the short piece on Cowen is to think that through. Who is getting coffee at this kind of place at this time of day?

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Opportunity Cost Neglect: Beach Edition

In August we passed 700 blog posts, and many address ideas of behavioral economics, tendencies (née biases), and decision making. Yet for all those published pixels, issues still creep into my life like a palmetto bug in the kitchen. 

On a dog walk with a neighbor, I mentioned an overnight trip to the beach which cost $200 for the hotel. We both agreed it was a good value for the time of year, location, and quality of the building. 

However, put a beach trip through the JTBD machine and the opportunity cost neglect shines through. 

Briefly reviewed: Opportunity cost neglect is the idea that people are terrible at coming up with alternatives for options they select. For example, when students were asked if they would buy an expensive iPod or a cheaper one, they chose the expensive one. However, once the researcher reminded them they could buy the cheaper version and spend the savings on music for said iPod, the students mostly switched their choice. If it’s not apparent, we don’t consider it

Our $200 hotel room was like four two-day theme park tickets. In Florida that is a bargain price. It’s also about the cost of one day of crafting, which we did the previous weekend. It’s more than renting Mulan on Disney+, which at $35 seems expensive however a family of four costs twice that (with snacks) at the actual theater. 

All these were recent reminders of how much context affects perceived value shotonaniphone

☝️ Some nice opportunity cost work; if you’ve got the cheaper product then highlight the opportunity cost. 

While I felt like Homer Simpson (D’oh!), it is fun to see these ideas in the wild. It was a path of JTBD I hadn’t looked at before and like a mental nudge, a good reminder to look for ways opportunity cost lives in our lives. 

Opportunity cost neglect also matters with time. It’s not until we highlight what we could have spent time on that we see the true cost. That’s why these pay-what-you-want features are short. The goal is to scream up the sigmoid curve of ideas.

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An easy way to change your mind.

This idea is related to Tyler Cowen’s idea of ‘meta-rationality’ which you read about in this pay-what-you want pdf.

Perhaps there’s no better time to see, sort, and participate in over reactions than week one of the NFL. Though I only watch a full game or two a year, there are a lot of lessons from the likes of Mike Lombardi, Bill Belichick, and questions like, should running backs run the forty-yard-dash? (Narrators: meh).

So, after week one of the NFL, how much should someone change their mind?

There were two comments from Wharton Moneyball related this this exact question.

First, the hosts wondered why the small but powerful vitamin D study wasn’t getting more attention. Their guess was a combination of things including excessive dosing, strong priors, sample size, and general application (the participants were already hospitalized but went to the ICU at a much lower rate with treatment).

While people may have strong beliefs about the efficacy of vitamin D it doesn’t hurt to go for more walks, while the weather holds at least. Whether or not someone believes in vitamin D, walking can’t hurt.

Late in the episode, Cade Massey and Josh Hermsmeyer noted the impressive week one play of Gardner Minshew. While both are rooting for his success, there’s no ‘go-for-a-walk’ equivalent for updating beliefs. Base rates suggest we stay closer to home until Mr. Minshew racks up some road wins.

Lastly is this study about teacher expectations. “(U)nbiased (i.e., accurate) beliefs can be counterproductive if there are positive returns to optimism or if there are socio-demographic gaps in the degree of teachers’ over-optimism, both of which we find evidence of.” Want better results from students? Have higher expectations than the data suggests.

The easiest way to change your mind is to make changing your mind inexpensive.

The hardest way to change your mind is to attach ideas to yourself. Jason Zweig calls this thinking “identity protective cognition,” and said, “If you are not judging the validity of ideas by long-term, objective, peer-reviewed evidence then you are just protecting your own identity and it’s foolish.” 

If vitamin doesn’t affect covid health, it still doesn’t hurt. If high expectations don’t affect student results, it still doesn’t hurt. If extrapolation from week one of the NFL doesn’t predict season success it does hurt.

Related: Make small poker bets.

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Small Poker Bets

Maria Konnikova is on the podcast-book-tour to promote The Biggest Bluff. It is great. I liked Mastermind more, only because I like Holmes more than poker.

One idea from her podcast conversations that might get missed by book readers is how Eric Seidel came to coach her. She told Shane Parrish: “He (Seidel) didn’t actually agree to be my coach. He said, this sounds interesting let’s try it out and see if it works.”

This is the key insight to poker, the book, and it seems life in general. It’s the insight for why poker proxies life, (though her last chapter, read the book it’s good, addresses the limits). 

No one knows what’s going to happen but you gotta be in the game to see

At first, Konnikova really wants to learn the rules and strategies. For example, if someone is dealt pocket aces should they play them? It’s a good hand, even a noob like me knows that. But the answer to ‘should I play this?’ depends on the flop, who has bet (how much), who has yet to bet, and so on. 

If the flop is three spades and someone ahead raises, then those pocket aces aren’t as sharp as we first thought. If the flop is a mishmash and we’re in the small blind then it might be good to see what the next card holds. 

When Seidel says “this sounds interesting” it was him calling a bet to see what the next card might be. It wasn’t a raise, or a fold. It was the right time for a small bet for what might be a larger gain. That moment, though Konnikova didn’t know, was the heart of the book. 

Konnikova started The Biggest Bluff looking for decision making in a card game. Years after the inception, Konnikova now thinks about life in poker terms like tilt and the Immanuel Kant idea of ‘wanna bet’. She probably notices Seidel’s insight too.