Rory Sutherland: observation

Transcript context

…No, things like the ability to behave irrationally, okay, there's a claim, and by the way, of all the negative reviews I get, they weren't where I expected at all. There's about three pages in the book where I basically say, "Being a bit Donald Trump has its virtues," which is that no one's going to dick with you because they're not entirely sure what you're going to do. Now, bear in mind this does not mean I'm absolutely an uncritical admirer of the Donald, far from it. But the guy has operated in the new real estate scene for quite a long time, and one of the things you've got to learn in that business is no one's going to survive in New York real estate if they can actually predict what you're going to do. I imagine that is not a world where being completely, consistently logical, never losing your temper, never walking away from a deal, et cetera. You have to be able to play those game theoretic kind of moves. And there were people who basically encountered this thing. Maybe I shouldn't put it right at the end of the book, and I put it somewhere early on who were then driven practically insane by this assertion. But the fact remains that there are certain circumstances in which the ability to behave irrationally is actually at the meta level, highly rational. The fact that, okay, if I'm never going to fight back against anybody who's slightly taller than me, it's very rational, but I'm going to spend my whole life being dicked around by people who are quarter of an inch taller than I. Very rational, they're bigger, stronger than me, never do anything to retaliate. But no, okay, we have to have some degree of, and Darwin spotted this, some degree of kind of random number generator in our maker. And the most classy example of this, which is I learned from Robert Trivers, the evolutionary biologist, is that when a hare is being chased by a dog, it goes into this incredibly random pattern of movement where it will zoop straight up in the air. It will suddenly do a 90 degree turn to the right, it will then suddenly double back on itself at huge speed. And it appears, I don't know how they find this out, that it doesn't actually know what it's doing, that there's a random number generator and the hairs, I think it's called in submarine warfare, it's called doing a crazy Ivan, where you just execute crazy maneuvers. It was Russian submarines when being pursued by American submarines would do something called a crazy Ivan. And the hare has the equivalent thing, which is basically it just enters this random movement, high-speed mode. And the point is, it can't consciously know what it's going to do next because the dog would then learn to anticipate what it was doing. It has to be random, and it almost has to be unconscious because the hare cannot give away any telltale signs of what its next move might be. the dog would then learn to anticipate what it was doing. It has to be random, and it almost has to be unconscious because the hare cannot give away any telltale signs of what its next move might be. And so if the hare knew what the next move might be, it would actually start to reveal preparatory muscular movements, which the dog could learn to read. But there are other reasons why we need to be irrational for far less controversial or far less survival dependent reasons than this. For instance, the exercise of social intelligence. We have two very strong inbuilt. We don't utility maximize. We have two very strong inbuilt default modes in the human brain, one of which is habit, do what I've done before, and the other one is social copying, do what everybody else seems to be doing. And they make extraordinarily good sense in evolutionary terms because an organism that had to learn everything from first principles would eat a hell of a lot of poisonous berries. Rather than going, look, "I've always eaten the yellow berries. I seem to be fine. I don't have the shits. Let's just stick to the yellow berries." Well, unless there's a massive shortage of yellow berries, that's probably a pretty good idea. Or equally, if you find yourself in a new environment or new habitat and all the other primates are eating the purple berries and nobody's touching the yellow ones in that environment, it is probably a good idea to copy them because there's extra intelligence there. In other words, I can learn effectively from copying my past behavior or copying the behavior of others. Actually, it's a fairly low cost way of discovering low variance, low downside behaviors. By the way, very interestingly, actually, it was an AI which actually went into investigating what would be necessary for more people to have solar panels and more people to have heat pumps. And it is not tell them the environmental benefits. It is not tell them how much money they'd save by having a heat pump. No. The single thing that would persuade people to have more heat pumps is if three people on their street had a heat pump. Now, to an economist, that drives them practically insane because they go, "No, no, no. The behavior of your neighbors should be entirely irrelevant. You should simply do the maths and calculate how much you'd save, compare that against the return you'd get in a high interest savings account and then decide whether the heat pump is worthy of the investment." But that's not how we work. We're not prepared to be the first person with the worst solution. With electric cars, there's probably a very strong heuristic, which is every consumer's learned, whether it was computers or DVDs or cassette decks or fax machines or actually washing machines, but going back with anything electrical, it pays to wait because they get better very quickly and they get cheaper very quickly. So are people wrong, therefore, not to make that decision? Well, no. What they're doing is they're learning heuristic from past experience, which by the way, when it applies to anything with a plug, it's been pretty much proven. re, not to make that decision? Well, no. What they're doing is they're learning heuristic from past experience, which by the way, when it applies to anything with a plug, it's been pretty much proven. I have friends who bought the early flat screen televisions and they paid thousands and thousands of dollars for these things, and you go into their house, you go, "God, that's shit." So an awful lot of these things are instinctive intuition that we've just learned to experience, and we don't know what the future's going to bring, but actually it's what you might call decision-making based on a reasonable expectation of something.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.