Front Matter
1 Our choice of the term ‘mental tactics’ is influenced by the work of Alfred Korzybski, who has done trailblazing work in the field of general semantics. He is well-known for his assertion “the map is not the territory” (Korzybski, A. (1958) Science and Sanity: An Introduction to Non-Aristotelian Systems and General Semantics, p. 58. Institute of GS.)
2 Charlie Chaplin: Modern Times (1936), distributed by: United Artists (UA) https://en.wikipedia.org/wiki/Modern_Times_(film)]
3 Stiehm, Judith H. (2010) US Army War College: Military Education in a Democracy, Temple University Press.
Chapter Zero
4 Meng Zhu, Yang Yang, Hsee, Christopher K. (2018) ‘The Mere Urgency Effect’, Journal of Consumer Research. [Online] Volume 45 (3, October). p. 673–90. Available from: https://doi.org/10.1093/jcr/ucy008 [Accessed: 24 June 2019].
5 Dwight Eisenhower presented a version of the adage in a 1954 speech at Northwestern University in Evanston, Illinois to the Second Assembly of the World Council of Churches, in which he credited an unnamed former college president for it.
6 This idea is known as ‘earning to give’ and is part of a wider philanthropic movement called ‘effective altruism’.
7 For a a good discussion on how to evaluate the true impact of career choices, the website https://80000hours.org is the go-to-place.
Chapter One
8 The idea was first developed by Peter Wason, an experimental psychologist, in 1960: Wason, P.C. (1960) ‘On the failure to eliminate hypotheses in a conceptual task’, Quarterly Journal of Experimental Psychology, 12(3), pp. 129–40.
9 Kahneman, D., Lovallo, D. and Sibony, O. (2011) ‘Before you make that big decision’, Harvard Business Review, 89(6), pp.50–60.
10 Watt, C.S. (2017) ‘“There’s no future for taxis”: New York yellow cab drivers drowning in debt’. The Guardian. [Online] 20 October. Available from: www.theguardian.com/us-news/2017/oct/20/new-york-yellow-cab-taxi-medallion-value-cost. [Accessed 24 June 2019].
11 Byrne, J.A. (2018) ‘139 taxi medallions will be offered at bankruptcy auction’. New York Post. [Online] Available from: https://nypost.com/2018/06/09/139-taxi-medallions-will-be-offered-at-bankruptcy-auction. [Accessed: 18 May 2019].
12 Centers for Disease Control and Prevention. (2017) ‘Morbidity and Mortality Weekly Report: Measles Outbreak — Minnesota April–May 2017’. [Online] Available from: www.cdc.gov/mmwr/volumes/66/wr/mm6627a1. [Accessed: 24 October 2018].
13 For further reading, we recommend Bazerman, M. (2014) The Power of Noticing: What the Best Leaders See. Simon & Schuster.
14 The display of great confidence matches the profile of prototypical leaders, which leads group members to choose narcissists in group settings. But even though they are perceived as more effective, they actually diminish group performance. See Nevicka, B, Ten Velden, F.S., De Hoogh, AH and Van Vianen, AE (2011) ‘Reality at odds with perceptions: Narcissistic leaders and group performance’, Psychological Science, 22(10), pp.1259–64.
15 Kruger, J. and Dunning, D. (1999) ‘Unskilled and Unaware of it: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments’, Journal of Personality and Social Psychology, 77(6), p.1121.
16 This expression has been popularised by then US Secretary of Defense Donald Rumsfeld in his news briefing about the thin evidence base linking Iraq with weapons of mass destruction. It can be traced back to the work of the two psychologists Joseph Luft and Harrington Ingham.
17 Hall, L. et al. (2010) ‘Magic at the marketplace: Choice blindness for the taste of jam and the smell of tea’, Cognition, 117(1), pp.54–61.
18 Dennett, D.C. (2013) Intuition pumps and other tools for thinking. W.W. Norton & Company.
19 Richard Feynman, American theoretical physicist (1918–88).
20 Tabarrock, A. (2012) ‘A bet is a tax on bullshit’. Marginal Revolution. [Online] 2 November. Available from: https://marginalrevolution.com/marginalrevolution/2012/11/a-bet-is-a-tax-on-bullshit.html. [Accessed: 10 November 2018].
21 Sagan, C. (1979) Broca’s Brain, Reflections on the Romance of Science. New York: Random House.
22 O’Connor, A. (2017) ‘Sugar Industry Long Downplayed Potential Harms’. The New York Times. [Online] 21 November. Available from: www.nytimes.com/2017/11/21/well/eat/sugar-industry-long-downplayed-potential-harms-of-sugar.html. [Accessed: 3 April 2018].
23 Kicinski, M. (2013) ‘Publication bias in recent meta-analyses’, PloS one, 8(11), p.e81823.
24 Zenko, M. (2015) ‘Inside the CIA Red Cell: How an experimental unit transformed the intelligence community’. Foreign Policy. [Online] 30 October. Available from: http://foreignpolicy.com/2015/10/30/inside-the-cia-red-cell-micah-zenko-red-team-intelligence/. [Accessed: 18 November 2018].
Chapter Two
25 The dual processing theory had its beginning in the work of William James, and branched out from there. James, W. (1890) The Principles of Psychology. New York: Henry Holt & Co. Vol. 1, p.673.
26 For much more on System 1 and System 2 processing, we recommend Nobel laureate Daniel Kahneman’s superb book, Thinking, Fast and Slow: Kahneman, D and Egan, P (2011) New York: Farrar, Straus and Giroux.
27 For a regularly updated and fairly comprehensive list, we suggest Wikipedia’s List of Cognitive Biases. Available at: https://en.wikipedia.org/wiki/List_of_cognitive_biases. For a more visual view refer to Buster Benson’s ‘Cognitive Biases Cheat Sheet’. Available at: https://betterhumans.coach.me/cognitive-bias-cheat-sheet-55a472476b18.
28 Tversky, A., and Kahneman, D. (1983) ‘Extensional Versus Intuitive Reasoning: The Conjunction Fallacy in Probability Judgment’, Psychology Review 90, 4. doi: 10.1037/0033-295X.90.4.293.
29 Carlon Rush, B. (2014) ‘Science of storytelling: why and how to use it in your marketing’. The Guardian. [Online] 28 August. Available from: www.theguardian.com/media-network/media-network-blog/2014/aug/28/science-storytelling-digital-marketing. [Accessed: 2 December 2018].
30 Baron, J. and Hershey, J.C. (1988) ‘Outcome Bias in Decision Evaluation’. Journal of Personality and Social Psychology Vol. 54, No. 4, pp.569–79. Available at: http://commonweb.unifr.ch/artsdean/pub/gestens/f/as/files/4660/21931_171009.pdf. [Accessed: 25 June 2019].
31 Project Implicit. [Online] Available from: https://implicit.harvard.edu/implicit/. [Accessed: 1 December 2018].
32 For those interested to dive much deeper into the science behind the Implicit Association Test, we recommend Banaji, M.R. and Greenwald, A.G. Delacorte Press (2013).
33 Morourke (2018) ‘Worker Centers & OUR Walmart: Case studies on the changing face of labor in the United States’. The Case Studies Blog, Harvard Law School. [Online] 19 June. Available from: https://blogs.harvard.edu/hlscasestudies/2014/12/02/hbs-shares-how-to-make-class-discussions-fair/. [Accessed: 25 June 2019].
Chapter Three
34 Rich, N. (2013), ‘Silicon Valley’s Start-Up Machine’. The New York Times Magazine. [Online] 2 May. Available from: https://www.nytimes.com/2013/05/05/magazine/y-combinator-silicon-valleys-start-up-machine.html. [Accessed: 11 November 2018].
35 Rich, N. (2013) ‘Silicon Valley’s Start-Up Machine’. The New York Times Magazine. [Online] 2 May. Available from: www.nytimes.com/2013/05/05/magazine/y-combinator-silicon-valleys-start-up-machine.html. [Accessed: 18 November 2018].
36 Azoulay, P., Jones, B., Daniel Kim, J. and Miranda, J. (2018) ‘Research: The Average Age of a Successful Startup Founder Is 45’. Harvard Business Review. [Online] 11 July. Available from: https://hbr.org/2018/07/research-the-average-age-of-a-successful-startup-founder-is-45. [Accessed: 18 November 2018].
37 The best guide we know to structured thinking, not only quantitative problem solving, but better organised thinking in general is Barbara Minto’s The Pyramid Principle. Originally published in 1978, it is what Australians would call “an oldie but a goodie”. Minto, B. (2009) The Pyramid Principle: Logic in Writing and Thinking. Pearson Education.
38 The problem of missing data is of deep interest to research scientists, data analysts and systems engineers and should be of importance to all of us. For a deep dive on missing data, see Raghunathan, T. (2015) Missing Data Analysis in Practice. Chapman and Hall/CRC.
39 For much more on distributions, we recommend Tegmark, M. (2014) Our Mathematical Universe: My Quest for the Ultimate Nature of Reality. Vintage.
40 Crockett, Z. (2015) ‘The most prolific editor on Wikipedia’. Priceonomics. [Online] 14 October. Available from: https://priceonomics.com/the-most-prolific-editor-on-wikipedia/. [Accessed: 20 February 2019].
Chapter Five
41 Marcus Aurelius, Meditations, IV, 3
42 The way we describe the trade-offs between skill and luck in this chapter are inspired by Michael Mauboussin’s book The Success Equation, a much more comprehensive treatise on this subject: Mauboussin, M.J. (2012) The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing. Harvard Business Press.
43 Each circle in the chart depicts the average height of two parents and their child. Results are grouped in increments of one inch, which leads to overlaps.
44 Galton, F. (1886) ‘Regression towards mediocrity in hereditary stature’, The Journal of the Anthropological Institute of Great Britain and Ireland, 15, pp.246–63.
45 Collins, J.C. (2001) Good to Great: Why Some Companies Make the Leap … and Others Don’t. New York, NY: HarperBusiness.
46 Henderson, A.D., Raynor, M.E. and Ahmed, M. (2012) ‘How long must a firm be great to rule out chance? Benchmarking sustained superior performance without being fooled by randomness’, Strategic Management Journal, 33(4), pp.387–406.
47 Mauboussin, Michael J. (2012) ‘The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing’, Harvard Business Review Press.
Chapter Six
48 Meadows, D.H. (2008) Thinking in Systems: A Primer. Chelsea Green Publishing, p. 2.
49 The R in the centre of the graphic indicates the type of the feedback loop (reinforcing) and its direction (clockwise).
50 A modified example from Kim, D.H. (1994) Systems Archetypes II: Using Systems Archetypes to Take Effective Action (Vol. 2). Pegasus Communications.
51 This example is inspired by the works of J.D. Moizer (1999) in System Dynamics Modelling of Occupational Safety: A Case Study Approach.
52 Merriam-Webster. Definition of system. Available from: www.merriam-webster.com/dictionary/system [Accessed: 15 April 2018].
Chapter Seven
53 Stevenson, B. and Wolfers, J. (2008) Economic Growth and Subjective Well-being: Reassessing the Easterlin Paradox. NBER Working Paper No. 14282.
Chapter Eight
54 For much more on alternatives, we recommend Johnson, S. (2018) Farsighted: How We Make the Decisions that Matter the Most. Penguin.
55 For more on this topic, we recommend Paul Nutt’s excellent book: Nutt, P. (2002) Why Decisions Fail: Avoiding the Blunders and Traps that Lead to Debacles. Berrett-Koehler Publishers.
56 For more details backing up this claim, see Hubbard, D.W. (2010) How to Measure Anything: Finding the Value of Intangibles in Business. John Wiley & Sons.
57 Not true of course, Simon is very safety-conscious!
58 This table and all related calculations can be downloaded from DecisionMakersPlaybook.com
Chapter Nine
59 Thomke, S. and Manzi, J. (2014) ‘The discipline of business experimentation’. Harvard Business Review. 92(12), p.17.
60 Branwen, G. (2008) ‘Melatonin improves sleep, & sleep is valuable’. Melatonin. [Online] 19 December. Available from: https://www.gwern.net/Melatonin. [Accessed: 7 November 2018].
61 Experiments with a sample size of 1.
62 Augemberg, K. (2012) ‘Quantified Self How-To: Designing Self-Experiments’. h+ Magazine. [Online] 14 November. Available from: http://hplusmagazine.com/2012/11/14/quantified-self-how-to-designing-self-experiments/. [Accessed: 25 June 2019]
Chapter Ten
63 Damodaran, A. (2007) Strategic Risk Taking: A Framework for Risk Management. Pearson Prentice Hall, p.262.
64 Let’s assume that only outside influences (such as family events or job offers in other cities) will determine the duration of her stay. We have further simplified this decision tree by only giving Annie 2 options: staying for the whole time or leaving after 12 months.
65 The option to abandon is closely related to the option to contract. Similar to the option to switch, the option to contract is basically the right to walk away from a project if certain conditions are unfavourable (unlike the option to switch, the option to contract does not include a right to resume operations).
Chapter Eleven
66 Most political scientists and economists would argue that the principal-agent problem is a variant of moral hazard. We don’t disagree. In practice, though, principal-agent problems are both so frequent and potentially detrimental that we think they deserve their own category.
67 The 2007 subprime mortgage crisis is one of the best possible educations on misaligned incentives in recent memory. For further reading, see Bethany McLean and Joe Nocera’s All The Devils Are Here (2010), Portfolio Press and Michael Lewis’ The Big Short (2010), W.W. Norton & Company.
68 Indeed, this specific dilemma is responsible for the entire professional category of the independent financial advisor, who receives no compensation or rewards from anyone but the immediate client, in an effort to cancel out the principal-agent dilemma.
69 For a beautiful and extremely positive take on how to use loss aversion to lift performance, see Rosamund Stone Zander and Benjamin Zander’s book: Zander, R.S. and Zander B. (2002) The Art of Possibility Transforming Professional and Personal Life. Penguin Books.
70 Strathern, M. (1997) ‘Improving ratings: audit in the British University system’. European Review 5. pp.305–21.
71 Bareket-Bojmel, L., Hochman, G. and Ariely, D. (2017) ‘It’s (not) all about the Jacksons: testing different types of short-term bonuses in the field’. Journal of Management. 43(2), pp.534–54.
72 For more wisdom like it, we recommend Dan Ariely’s lovely little book: Ariely, D. (2016) Payoff: The Hidden Logic That Shapes Our Motivations. TED Books.
73 See Chip Health’s article: Health, C. (1999) ‘On the Social Psychology of Agency Relationships: Lay Theories of Motivation Overemphasize Extrinsic Incentives’. Organizational Behavior and Human Decision Processes. Vol. 78, No. 1, pp. 25–62.
74 Deci, E.L., Koestner, R. and Ryan, R.M. (1999) ‘A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation’. Psychological Bulletin. 125(6), p.627.
Chapter Twelve
75 Kahneman, D. and Tversky, A. (1979) ‘Intuitive Prediction: Biases and Corrective Procedures’. TIMS Studies in Management Science. 12: 313–27.
76 Blenko, M., Mankins, M. and Rogers, P. (2010) ‘The Decision-Driven Organization’. Harvard Business Review. [Online] June. Available from: https://hbr.org/2010/06/the-decision-driven-organisation.
77 Prasad, V. (2010) ‘Reclaiming the morbidity and mortality conference: between Codman and Kundera’. Medical Humanities. 36(2), pp.108–11.
78 Di Stefano, G., Gino, F., Pisano, G.P. and Staats, B.R. (2016) Making Experience Count: The Role of Reflection in Individual Learning. Harvard Business School.
Chapter Thirteen
79 Y Combinator. Available from: https://old.ycombinator.com/munger.html. [Accessed: 21 November 2018].
80 For much more on how dating and human relationships have transformed in the last century, we recommend Ansari, A. and Klinenberg, E. (2015) Modern Romance. Penguin.
81 A phrase frequently used by the excellent historian Y.N. Harari: Hariri, Y.N. (2018) 21 Lessons for the 21st Century. Random House.
82 As above: we credit Alfred Korzybski for this phrase. Korzybski, A. (1958) ‘Science and Sanity: An Introduction to Non-Aristotelian Systems and General Semantics’. Institute of GS. p.58.
Appendix
83 Critch, A. (2012) ‘The Credence Calibration Game, by CFAR – an overview’. Available from: http://acritch.com/credence-game/. [Accessed: 9 December 2018].
84 On predictions specifically, we highly recommend Philip Tetlock’s and Dan Gardner’s book Tetlock, P. and Gardner, D. (2016) Superforecasting: The Art and Science of Prediction. Random House Books. It synthesises findings from The Good Judgment Project, which showed that specifically selected amateur forecasters were often more accurately tuned than pundits or subject-matter experts. Tetlock, P.E. and Gardner, D. (2016) Superforecasting: The Art and Science of Prediction. Random House.