3

Spot the terrorist

• Law• Finance• Engineering• Islamic Studies• French

Gambetta and Hertog write about a particular mind-set among engineers that disdains ambiguity and compromise. They might be more passionate about bringing order to their society and see the rigid, religious law put forward in radical Islam as the best way of achieving those goals. In online postings, Abdulmutallab expressed concern over the conflict between his secular lifestyle and more extreme religious views. "How should one put the balance right?" he wrote.

Terrorist organizations seem to have recognized this proclivity—in Abdulmutallab, obviously, but also among engineers in general. A 2005 report from British intelligence noted that Islamic extremists were frequenting college campuses, looking for "inquisitive" students who might be susceptible to their message. In particular, the report noted, they targeted engineers.

The sweet spotTechnology

Psychology

Economics

Two problems• Marketing is lacking in influence• Our models have not kept pace with changes in the

media we use to deploy them• No first principles

Praxeology

Time for a new vocabulary?

A few new phrases• Availability (mental and physical distribution)• Signalling – (brand personality)– Handicap (brand quality; the brand as bond)– Heuristics & biases (sequencing effects)

• Framing, comparison and context• Immediacy– Loss (Satisficing and maximising)

Information Asymmetry & commitment

Heuristics• "Isn’t more information always better? In economics, Nobel prizes are regularly awarded for

work that assumes that people make decisions as if they had perfect information and could compute the optimal solution for the problem at hand. But how do real people make good decisions under the usual conditions of little time and scarce information? Consider how players catch a ball—in baseball, cricket, or soccer. It may seem that they would have to solve complex differential equations in their heads to predict the trajectory of the ball. In fact, players use a simple heuristic. When a ball comes in high, the player fixates the ball and starts running. The heuristic is to adjust the running speed so that the angle of gaze remains constant —that is, the angle between the eye and the ball. The player can ignore all the information necessary to compute the trajectory, such as the ball’s initial velocity, distance, and angle, and just focus on one piece of information, the angle of gaze.”

Gerd Gigerenzer

Price heuristics

Choice architecture, pt 2

Framing - II

Context

A problem

Which Is Brighter, A Or B?

Which Is Brighter, A Or B?

23

Which Is Brighter, A Or B?

24

Which Is Brighter, A Or B?

A Uniform Grey Strip?

A Uniform Grey Strip?

28

A Uniform Grey Strip?

A Uniform Grey Strip?

Change the frame, change the game

Relativity: Framing effects

Selling cars offline

How Changing a Button Increased a Site'sAnnual Revenues by $300 Million

One point

• Logic won’t tell you this• Research won’t tell you this

Another two problems• “People don’t do what they say

they believe; they do what’sconvenient, and then they repent.”

“When a man says ‘my wife doesn’tunderstand me’, it doesn’t mean he’splanning an affair. He’s already had one.”