TED Talks :: Monkeynomics


Advisors,

I’m deeply inspired.
In early 2011 the most amazing online forum of inspiration, action-taking visionaries and leaders in the world was introduced to me via www.ted.com. Hopefully you’re already familiar with this incredible movement, but if not – welcome.

Every minute you spend exploring their website, speeches and conferences will be time well spent. In the foreseeable future I plan on taking a number of my favorite speeches from TED and applying those ideas to the financial advisory world and your practice. Today is another summary for you, featuring TED (“Ideas Worth Spreading”). My challenge to you on each TED post sent: Give me 18 minutes of attention (and some shared thought on bettering your financial practice) and I’ll open your eyes to growth forever…

TED is a nonprofit devoted to “Ideas Worth Spreading”. It started out (in 1984) as a conference bringing together people from three worlds: Technology, Entertainment, Design. TED’s YouTube channel is the #1 subscribed to non-profit channel on the site. Topics include an increasingly wide range of topics within the research and practice of science and culture. The speakers are given a maximum of 18 minutes to present their ideas in the most innovative and engaging ways they can. Past presenters include Bill Clinton, Jane Goodall, Malcolm Gladwell, Al Gore, Gordon Brown, Richard Dawkins, Bill Gates, educator Salman Khan, Google founders Larry Page and Sergey Brin, and many Nobel Prize winners (http://en.wikipedia.org/wiki/TED_(conference)).


TODAY’S TOPIC:
  A Monkey Economy as Irrational as Ours

ABOUT THIS TALK:  Laurie Santos looks for the roots of human irrationality by watching the way our primate relatives make decisions. A clever series of experiments in “monkeynomics” shows that some of the silly choices we make, monkeys make too.

ABOUT LAURIE SANTOS: Laurie Santos runs the Comparative Cognition Laboratory (CapLab) at Yale, where she and collaborators across departments (from psychology to primatology to neurobiology) explore the evolutionary origins of the human mind by studying lemurs, capuchin monkeys and other primates. The twist: Santos looks not only for positive humanlike traits, like tool-using and altruism, but irrational ones, like biased decision-making. In one experiment, Santos and her team taught monkeys to use a form of money, tradeable for food. When certain foods became cheaper, monkeys would, like humans, overbuy. As we humans search for clues to our own irrational behaviors, Santos’ research suggests that the source of our genius for bad decisions might be our monkey brains.

KEY POINTS:

  1. Social scientists are learning that most of us, when put in certain context, will make very specific mistakes. The errors we make are predictable, we make them repeatedly and they’re immune to evidence that says otherwise.
  2. Do mistakes originate from our environment or our mind being designed badly?
  3. Can we study monkey’s economic decisions to see if they do the same dumb things that humans do (thereby determining design flaw in environment or mind)?
  4. A monkey economy was created, including the first known non-human currency.
  5. Monkeys get proficient at trading tokens for food & purchasing items in an artificial marketplace.
  6. Collaborating with economists, they determined monkeys qualitatively and quantitatively act as humans do in a real market.
  7. People’s intuitions about how much risk to take greatly varies depending on how much (or what) they started with.
  8. Humans have a very difficult time thinking in absolute terms and a much easier time thinking in relative terms (more or less).
  9. Subjects get risky because they want the chance there won’t be any loss.
  10. In a “loss mindset” we become more risky; a worrying trait.
  11. Humans must recognize our own biological limitations in financial decision-making to overcome them and succeed.

VIDEO:

For a complete transcript of the talk click the “Interactive Transcription” button just below the video here.

ACTION ITEMS (for the Financial Professional):

  1. Rebrand, study & and give the “Coin Flip Experiment” (11 minute mark) at your seminar. Then explain what retiree intuition is, why it’s there and what that intuition means to retirement planning.
  2. Add seminar invitation point such as “Learn the 35 Million Year Old Investing Strategy” “Learn Why Evolution has Hampered Your Financial Decision-Making”
  3. For better comprehension during appointments, frame decisions prospects are making in relative terms (more or less than…) rather than absolutes (dollar amounts).
  4. If your goal is for prospects to move away from market risk-based investments that are currently at a loss, it’s advantageous for you to speak in absolutes; not relative terms to where they started.
  5. Can you use this video in its’ entirety for a client event? Then use my speaking notes to recap and begin a discussion session?

I hope you enjoy these thoughts as much as I enjoyed studying Laurie’s work. Implement just one or two and become even more successful in counseling today’s retirees. Advise with passion.
MJN

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TED Talks :: In Control of Our Decisions?

Advisors,

I’m deeply inspired.
In early 2011 the most amazing online forum of inspirational, action-taking visionaries and leaders in the world was introduced to me via www.ted.com. Hopefully you’re already familiar with this incredible movement, but if not – consider this your welcoming.

Every minute you spend exploring their website, speeches and conferences will be time well spent. And into the foreseeable future I’m taking a number of my favorite talks from TED and applying those ideas to the financial advisory world and your practice. Today is my initial summary to you, featuring TED (“Ideas Worth Spreading”). My challenge to you on each TED post sent: Give me 18 minutes of attention (and some shared thought on bettering your financial practice) and I’ll open your eyes to growth forever…

TED is a nonprofit devoted to “Ideas Worth Spreading”. It started out (in 1984) as a conference bringing together people from three worlds: Technology, Entertainment, Design. Since then its scope has become ever broader. Along with two annual conferences — the TED Conference in Long Beach and Palm Springs each spring, and the TEDGlobal conference in Edinburgh UK each summer — TED includes the award-winning TEDTalks video site, the Open Translation Project and TED Conversations, the inspiring TED Fellows and TEDx programs, and the annual TED Prize (http://www.ted.com/pages/about).

TED’s YouTube channel is the #1 subscribed to non-profit channel on the site. Topics include an increasingly wide range of topics within the research and practice of science and culture. The speakers are given a maximum of 18 minutes to present their ideas in the most innovative and engaging ways they can. Past presenters include Bill Clinton, Jane Goodall, Malcolm Gladwell, Al Gore, Gordon Brown, Richard Dawkins, Bill Gates, educator Salman Khan, Google founders Larry Page and Sergey Brin, and many Nobel Prize winners (http://en.wikipedia.org/wiki/TED_(conference)).

TODAY’S TOPIC:  Are We in Control of Our Own Decisions?

 ABOUT THIS TALK:  Behavioral economist Dan Ariely, the author of Predictably Irrational, uses classic visual illusions and his own counterintuitive (and sometimes shocking) research findings to show how we’re not as rational as we think when we make decisions.

 ABOUT DAN ARIELY:  It’s become increasingly obvious that the dismal science of economics is not as firmly grounded in actual behavior as was once supposed. In Predictably Irrational, Dan Ariely tells us why. “If you want to know why you always buy a bigger television than you intended, or why you think it’s perfectly fine to spend a few dollars on a cup of coffee at Starbucks, or why people feel better after taking a 50-cent aspirin but continue to complain of a throbbing skull when they’re told the pill they took just cost one penny, Ariely has the answer.”   –Daniel Gross, Newsweek

KEY POINTS:

  1. Our intuition is fooling us; in a repeatable, predictable, consistent way.
  2. If we have mistakes using our vision (which we use so frequently) what’s the likelihood of making mistakes with something we’re not quite as good at? For example, financial decision-making.
  3. Cognitive illusions are much more difficult to illustrate than visual illusions.
  4. Begging only gets you so far (28% in organ donation). The secret to success beyond begging lies in opt-in vs. opt-out decisions.
  5. When people don’t know what to do, most times they do what is chosen for them.
  6. Default is the driver of decision-making.
  7. With only two options on a decision, most crowds will likely be split 50/50. But adding an inferior option, tied to one of the other options, makes that superior option chosen more than 50/50 (Economist subscription example).
  8. When it comes to the physical world, most people understand our limitations. But when it comes to the mental world, most people don’t understand their cognitive limitations. The more this is realized, the better we can design the future.

VIDEO:  

FULL TRANSCRIPTION:  CLICK HERE

ACTION ITEMS (for the Financial Professional):

  1. Visual illusion is a metaphor for irrationality. Can you use that table graphic about length in your seminar or appointment process? Can you use the cube graphic in the same way?
  2. How many “decision illusions” do clients make that you can help them realize?
  3. Think through your own office procedures, especially your appointment process. What do clients have to opt-in for? Is that the best option? Or are there items that clients should already be involved with, that they’d need to opt-out of? The person who “designs the form” has the most control of the decision. Not the decision-maker themselves.
  4. Can you take that Economist magazine subscription idea to your seminar appointment scheduling (example below)? Can you go from 50% appointments set to 70-80% appointments set by adding a “dominated option”?
  • I Don’t Need a Free Consultation
  • Check Here for a Free Consultation
  • Check Here for a Free Consultation and Free Tax Return
I hope you enjoy putting these ideas in place as much as I enjoyed sharing them with you. Make it a great week and thanks for all you do.
MJN