Risk Management and Human Irrationality

This is a fascinating article.  The observation that humans are naturally programmed to behave irrationally is so hard to accept, that even if you believe it – even if you are thinking about it – it’s all too easy to fail to realise when you are doing it yourself.  I fell into the same trap; after reading the article I was more than half-convinced that if I was playing Quake I wouldn’t make the same mistake everybody else did … until I realised this was the exact same thing that happened pretty much every time I play Civilization.

Granted, the constructs in Civilization are more complicated; rather than tricking you into saving money to earn interest instead of protecting your house, despite the known risk of an earthquake, Civilization tricks you into spending your time building things like Libraries and World Wonders instead of military units, or researching education instead of gunpowder, despite the known risk of an invasion.  Still, the mental processes involved are obviously directly analogous.

What I found especially fascinating about this article is the last paragraph, where the very people explaining about how and why we behave irrationally do the exact same thing themselves in the very process of describing it!

(That is, in saying “[this is] not a war like the War on Terror, against other people [but is] mainly a war against ourselves” they miss the fundamental point that the terrorism depends on the exact same behaviour they’ve just been describing; terrorists have after all never been able to do our society any serious harm … except by making us react in ways that hurt ourselves, because we’re naturally irrational.)

Scott Adams once said that in modern society everybody is functionally stupid.  That just keeps sounding more and more true as time goes by. 🙂

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