Thoughts of The Week #54

Thoughts of the Week is a review of the five most interesting thoughts I encountered on Twitter and on other mediums during the last week.

1/5: Solving for the specific

“Solve for the specific and you may also solve for the general. The reverse does not apply. ” – Rory Sutherland (link)

Centralized problem solving tends to produce low-resolution solutions. This is problematic in a high-resolution world, for the discrepancy in resolution creates a high potential for unwanted side effects.

The problem is not with the people in the centralized position. The problem is that if you must look at a large map, as it happens if you have a centralized role, then you must zoom out. And if you are illuminated enough to temporarily zoom in, you will have to present a solution to other bureaucrats who are looking at a zoomed-out map.

I wrote before that one of the issues of centralization is that it is efficient only to the central observer. Another issue is that it can only pass low-resolution solutions. 

As I wrote in my thread “How good policies get adopted” (link), sustainable solutions with no side effect can only be adopted the bottom-up way: seeing what works after all eventual side-effects have been discovered and propagating it horizontally.

Solve for the specific and you may also solve for the general.

2/5: Self-complications

“Give others what they want and they will give you their money. Why people try to complicate or ignore this is beyond me.” – @zen_fi (link)

People don’t want to be happy; they want to be happy at their conditions. Therefore they end up unhappy.

Look around you. Everyone is frustrated when they cannot lose weight, but only fit people are frustrated when they cannot go to the gym.

Frustration is what happens when you desire results without desiring the action that is the most likely to bring them.

Dilbert cartoonist Scott Adams said: “if you want success, figure out the price, then pay it.”

The thing is: you can choose whether to pay the costs of success / happiness / health, but you cannot choose what those costs are.

(PS: this advice is contained in my book “100 Truths You Will Learn Too Late”, link)

3/5: The Ludic Fallacy

“The investment return profile of angel investing for social status is way more attractive than angel investing for financial return.” –  Alex Danco (link)

The risk/benefit analysis investors make when deciding whether to invest (or even whether to pursue a career as an investor) is seldom purely financial.

The ludic fallacy holds that seeing activities as bounded games is wrong: in games, rules and payoffs are known, whereas in real life, they are unknown.

A particular instance of the ludic fallacy consists in believing that the risks and payoffs of participating in an activity have to be contained in the activity itself. This is not always true, and when it isn’t, we have the illusion of irrationality.

For example, why do we drive at 80km/h on a road for which the safe speed is 50km/h? Is it irrational to risk our life for no tangible payoff? Well, if we’re driving fast in order not to be late at a meeting at which arriving late might cost our job, and thus the ability to feed our family, we’re doing it to mitigate a risk. The fact that the risk of driving slow resides outside of the activity shouldn’t be a reason not to include it in the cost-benefit analysis. Once we consider that there are risks in both driving fast and slow, then a previously irrational behavior suddenly makes sense. (Of course, there are other factors at risk, such as the fact that a driver might make a wrong cost/benefit analysis due to underestimating the risks of driving fast, but that’s another thing).

When a behavior looks irrational, chances are that we set its boundaries too narrowly.

Ergodicity, for example, is the natural conclusion to widening the boundaries of a gamble beyond a single iteration. It shows how an apparently irrational behavior such as risk aversion becomes rational once we consider that playing a gamble multiple times might introduce a risk of ruin (for example, someone with $10k in the bank cannot go bankrupt playing a $5k bet once, but he can go bankrupt playing it more than once).

(PS: I talk more about how our brain perceives risks and ergodicity, here)

4/5: Strawmen

“It is absurd to think that somehow Friedman’s free-market ideology triumphed and the time has come to roll back his policies.” – Russ Roberts (link)

In his well-argued essay, Russ Roberts makes the point that it is incorrect to hold free-market ideologies as the culprit of many problems in contexts in which we are very far from free markets.

I made a similar point in my twitter thread “Fractals and Prosperity” (link), in which I argue that capitalism works in the measure it fractalized private property (of assets and consequences of their misuse) and fails in the measure it doesn’t. Similarly, if one thinks about the failure of free markets, he will mostly find examples in which free markets weren’t free.

5/5: Being in charge

“Being in charge […of an institution…], your set of concerns morphs. In this more cybernetic mindset, you come to focus on the institutions themselves, on building and repairing a base of power, finding new ways to extend the power to accomplish your vision, even if it means empowering others.” – Wolf Tivy (link), found via Stephen Pimentel

Tivy wrote an engaging thought experiment of how it would feed to think like a government. I like it very much for how it describes the progressive change in perception and incentives that happens as one assumes a new role and is exposed to new risks, information and sources of reinforcement.

A thought experiment based on Pavlov’s famous experiment: a dog’s response to a bell after a few reinforcement sessions of “bell ring followed by a sausage” is closer to that of a human who underwent the same reinforcement than that of a dog who didn’t undergo it.

The point is: it’s easy to say “the current politician is bad”, but what’s the point of selecting better politicians if, once they get into power, they are exposed to the same set of reinforcements?

Sometimes, a person problem is a person problem, but more often, it’s an environment problem.

My own essays for this week

Lagging responses to the coronavirus (link)

The lag problem for the coronavirus (link)

The most important question for stopping the coronavirus (link)

Fractal action as a solution to limit the coronavirus spread (link) (Vittorio Zanetti translated it in Italian, here)

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(Here is my general disclaimer.)

The order of the thoughts only represents the order in which I encountered them, and does not imply any sort of prioritization. Quotes are edited for punctuation and grammar. Eventual formatting is mine. Also text outside of italicized quotation marks is mine. The inclusion of quotes does not imply my endorsement; merely, that they gave me food for thought. I did not optimize this review for clarity, but for its ability to spark thoughts in the reader.