Skip to main content

tv   Charlie Rose  PBS  December 8, 2016 12:00am-1:01am PST

12:00 am
>> rose: welcome to the program. tonight michael lewis, his new book is called the undoing project. >> i had written moneyball, which was about the way in my mind, the way markets misvalued people, in that case baseball players. misjudged these players, so on and so forth. my interest was kind of that. like why, if baseball players can be misjudged who can't be. i never asked the question why it happened. rent view after the book came out in the new republic, they said basically michael lewis has written a good story but he doesn't seem to understand there's a source for all these stuff. there are two israeli skhul journalists who did work on the biases of the human mind that
12:01 am
lead to things like baseball players being misjudged and political candidates being misjudged and doctors misdiagnosing diseases. >> rose: michael lewis for the hour, next. >> rose: funding for "charlie rose" has been provided by the following: >> and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: michael lewis is here. his books have sold more than nine million copies. three have been adapted into successful feature films. his new book is called the undoing project. it tells the story of two
12:02 am
israeli psychologists, amos tversky and daniel kahneman and their groundbreaking work uncovering the human biases of the human mind. "new york times" says the book combines law electual rigor with complex portraiture. he's written a hell of a love story and a tragic one at that. i'm pleased to have michael lewis back at this table, welcome. >> thanks. >> rose: it's worth noting how you came to know these two guys. >> yeah. it was accidentally. most of the folks are but i had written moneyball, which was about the way in my mind, the way markets misvalued people. in that case baseball player. misjudged these players so there were cheap expwuns and expensive ones and so on and so forth. my interest was kind of that. why if baseball players can be misjudged, who can't be. i never asked the question of why it happened. in a review after the book came out in the new republic, they
12:03 am
said basically michael lewis has written a good story but he doesn't seem to understand there's a source for all this stuff. actually these two israeli psychologists who did work on the biases in the human mind, the targeted biases that lead to things like baseball layers being misjudged and political candidates being misjudged and doctors misdiagnosing diseases. >> rose: and most importantly how the my works. >> and how the mind works. and he said these two guys are named amos tversky and danny kahneman. i went and read some of the stuff. i was embarrassed i never heard of them. kahneman just won the nobel prize in economics even though he wasn't an economickists. finally what happened i was having drinks with a psychology professor friend of mine. it never would have happened without him. this had been irking there's this story to moneyball ask i don't know what it is. he says danny kahneman has a house just up the hill from you
12:04 am
and he's a friend, i'll hook you up. it turned out amos tversky had died in 1996 but kahneman was still before. >> before the no well prize. >> well before the nobel prize, six years. i went up and met danny and we ars and i would listen to him talk about this relationship with amos tversky. it didn't take long i realized the one term i had taught at the university of california berkley, one of my favorite steurchlts was a kid name owner tversky who happened to be amos tversky's oldest child. and we had a friendship and so the tversky family was very generous, kind of opening up his papers and his life to me. to the extent they could. and danny, after oh it took him two or three years to get his mind around the idea i was going to write a book about him. it was pretty organic and it took quite a bit of time for me to see just what this story was and how to tell it.
12:05 am
so i took time before i said this is a book. >> rose: in fact, you were not sure you were up to it. >> true. it's not the first time i felt that but i felt more that way than i ever felt before and there were a couple reasons. the superficial reasons at the heart of the book you've got an intellect cull psychology i had to teach myself about. and you had a back drop of israel in the early days which is a really peculiar interesting place and i knew a bit about it but i didn't know enough about it to feel authoritative about creating that setting. but the biggest thing i think, the source of hesitancy was the, i normally feel intellectually equal to my subjects. i can get my mind around my subjects. and what they're talking about. in this case, the firstility and the power in these guy's minds was daunting. i knew that basically i was
12:06 am
going to be in the position of the b student trying to write about the a students. i felt like, i said this, i felt like a gnat trying to hug two elephants. i wasn't sure i could get my arms around them. i also new in the back of my mind, danny kahneman is the world's sharpest critic and doubter of things. no matter what i did, he was going to find it wanting. so i knew i had a living subject with whom i had failed before i had started. >> rose: he's the great doubter but go back to how israel had shaped him and how their experience in the military had shaped who they were. they're very different characters, and in fact the "new york times" quote i had in the introduction said combines intellectual rigor with complex portrait architecture. mr. lewis has written one hell of a love story. a tragic one at that. they felt how? >> it wasn't sexual. when they traveled together they were occasionally mistaken for a gay couple because they were inseparable.
12:07 am
>> rose: one could finish the other's sentences. >> they clearly were in love with each other but they were heterosexual men. so as danny put it to me once, but he said it in very many ways he said you know you go through life and you're in love with women and so on. but with amos i was wrapped. and i think he felt, i know he felt that amos understood his mind better than anyone understood his mind, better than he himself understood it. i knew he felt, like an old jerry mac wire thing. they both felt there was a piece of themselves missing in the other but they were so different. they were even to their friends in israel the least likely people to even be friends. and nobody could imagine what was going on behind the closed door when they were working. so it was a love of people who are very very very different from each other. and if they don't have that,
12:08 am
they don't bother even to work. in fact at some point it was pretty clear that the work is an excuse just to be together. i'm serious. it's an excuse to be together. they are exploring human nature and how the human mind works but joint of being there. >> did they work with one typewriter. >> in the beginning, they worked, they didn't have a typewriter. but they fit side by side and write it together. and one of the people who happened to catch a passing glimpses of them working together it felt like someone brushing each other's piece. you can't imagine how they did this. side by side, do whatever they were doing and they'd write a sentence a day was fast. and the, so, and the character as you say, i mean tversky, he is a literary, they're both literary characters. tversky, anybody who encountered him came away with a sense they had met somebody unlike any
12:09 am
other person they ever met. someone wanted to design an intelligence test and the intelligence test was the longer after you meet amos it takes you to figure out amos is smarter than you, the stupider you are. everybody said that's the smartest man in the world and he was not pretentious about it. he was kind of a normal guy who happened to be endowed with this incredible brain. he had been trained by society to be a spartan warrior. he was a killer and without a shred of doubt, totally self serving. danny was a holocaust survivor. he was a small child. he spent hiding in barns and living in chicken coops watching his father die. for the rest of his life these kind of an evasiveness about him. it's almost as if he's still in hiding. like he doesn't, people always
12:10 am
felt kind of removed. he was all at some removed, some formal distance from him, from them. and also from his own mind. he never became wedded to anything or committed to anything. he would have all these ideas. what he is is an incredibly fertile poet novelist kind, he has startling insight after startling insight. he was the idea generating machine. he never had the confidence. >> rose: he was the idea generating machine. >> yes, i think so. i mean amos -- >> rose: you're not saying one was smarter than the other, they had different kinds of intelligence. >> different kinds of intelligence. it gives to the idea life and art is different things. they have a stereotypical scientific mind someone with not quite stereotypical but artistic mind. science is a product, there's a lot of creativity in good
12:11 am
science. >> rose: they had the same curiosity. >> absolutely. they were jews after world war ii living in a state of israel that looked like it could be extinguished at any moment. they were naturally interested in how the mind deals with uncertainty and how it makes judgments and decisions when the situation is inherently probabilistic. life depended on it i think. and they thought they were getting at something because everything in human life goes through the mind that if you can describe the kind of the tricks the mind plays on you in different situations, you are describing something really fundamentally human nature. they were getting at i think the spirit that really informs them is their sense that humanity, human beings are inherently fallible. they are wired for certain kinds of mistakes. and it's not shameful. we shouldn't be ashamed of our fallibility we should seek to understand it and try to adapt
12:12 am
to it rather than pretend we're infallible. that was at the center of all their work, that was one of the ideas. we're going to demonstrate the inherent nallability of man so we can start to deal with it. >> rose: is that one of the things you can make a long stretch here and say that's one of the thing that can happen in the u.s. election. fallibility, you know what's going to happen. >> you can watch what's going on through the length they built. they say a few things at once about the election. one is frightening thing about donald trump is the insistence of his own fallibility. we know now that the mine is capable of doing all kinds of strange things. if you're not suspicious at all of your own mind you're way way oof confident about your judgments. his inability to modulate his judgment is to just think he's right and he makes up a story why he was right. they also described this. they call it hindsight that i
12:13 am
knew it was comingn't when i didn't know it was coming. that's their phrase. that's one of the students actually dreamed up the phrase but that's their insight that people seek to make the world seem more certain than it actually is. one of the ways they do it is they still stories about what happened and explain what they could never have predicted because it was unpredictable and some ways inexplicable. so they would have had things about trump and have things to say about trump's voters. the way people are attracted to overconfidence. obama has this problem. he's had this problem from the very beginning. he's actually intellectually honest and he's aware that thinks judgments might be wrong. but you can't as president come up to the podium and say i might be wrong here. you have to project total certainty and that's false. >> rose: what is it obama said he was wrong about. >> what has he said he was wrong about? i mean he's done it often. i have to start thinking about
12:14 am
but it's enabled him to change his mind. gay marriage. what he actually thought and what he said he thought maybe are two different things but he pretbledded to be, have problems with it and he allowed the country -- >> rose: that might have been a political. >> it might be the spirit he operates. >> rose: it is not politically viable to do it. >> he was able to do it politically because he persuasively is a person who does change his mind and is capable of changing his mind. facts change i change my mind. >> rose: the opinion on the ground changed too on that case. >> that's right. so he could do it. but i'm just, the, so this -- and what they would also say is that whether knowingly or not, trump successfully exploited the weaknesses in the human mind. the ability to prey upon these kind of, he had an ability to prey upon the kind of case in mind. so for example if you want to, if you give people a really
12:15 am
vivid story about an immigrant who happened to murder somebody, you can whip up a general idea that this is what mexican immigrants do and people don't stop to think well actually, we can deterministically whether mexican immigrants are more likely to do this more than the average person but people don't think that way. they think of vivid examples. >> rose: they can give power to a narrative that had nothing to do with statistics. >> one of the great points is that the mind thinks in stereotypes. that stereotypes are a tool for the mind. classification the mine makes. very crude stereotypes, and you can get people to make the mistake of taking someone as a really great baseball player because they look like a great baseball player or make a mistake they are a good basketball player because they are a 6.82 guard.
12:16 am
and he can think in terms very crudely in terms of leaning against it in terms of stereo types and prey on people's mind. >> rose: the essential idea they had was the mind was fallible. >> that's a good start. >> rose: that's at the core. >> fallible i systematically fallible. but we all make the certain kind of mistake. if our unreasons are not just kind of random fierg of emotions or whatever because whole markets can make a mistake because we all go in a different direction. that's a mistake. that's one of the ideas at their core. they explored it in some deal what those mistakes were and they did it with kind of a curious kind of science. >> rose: if you look at all these discoveries that they made about the human mind and how it works, can you go and attribute that to one of the other or do you have to say in every case it is something that they came through, that they came to together. >> that's the question.
12:17 am
that's the question that unraveled the relationship. everybody asked that question. who did it. that sounds like amos. because amos was so breathtakingly intelligent on the surface. people saw the work and they said well we could see how amos might have done this more than we can see how danny might have done this. and so long as they were in israel people didn't pay much attention to who did what. but the appears is you can't. the answer is, the work they did separately from each other was nothing like the work they did. the work they did together was had its own voice. and neither one of them would have been able to do it alone and they both acknowledged that to themselves and to each other and to the world. world didn't want to hear it. so a amos got given for the joit work a macarthur award.
12:18 am
the fastest tenure appointment in the history of stanford university found out he was available maybe in the market in the morning and that afternoon they gave amos a job offer. danny, they didn't think to give danny a job offer. so the world corroded, as amos said, he said for some reason the world hostiled the collaboration like a hostile marriage. they needed to assign individual credit but the couple from the outside especially the academic world to kind of say who did what. that was a horrible mistake because when they were together, danny actually said in an interview that never got published in the early 80's, he said you know together we're -- separately we're okay, together we're a genius. and the idea that you have to take it apart is such a shame. let them just stay together, the
12:19 am
magic there. >> rose: why did they break up? three -- they came back together -- >> when you read the story danny pushed him away. a number of people felt amos to the course of amos' life that amos' voice was so strong he drowned out them. he felt they were consumed by him. the you spent a lot of time with may must you couldn't get amos out of your head. and danny could deal with that but so here's what i think happened. what happened on the surface was amos got all the credit. danny got very little of it. amos' status went through the roof. he's like a global academic rock star. and danny was maybe a little envious but i don't actually think that's what drove them apart. i think what drove them apart was danny's perception their situation their status became unequal. that amos' feelings for him changed that amos started to
12:20 am
believe -- >> rose: that's what danny thought. >> right. and he felt maybe a little condescended to or that amos became, danny became just another person amos could be slightly contemptuous about. i don't know if that's true, danny felt that way and it was incredibly wounding because they were in love. and he pushed him away. he fled. so he ceased to collaborate with amos. >> rose: amos must have seen it coming and he couldn't extraordinary intelligence overwhelmed -- >> you must have seen couples. the typical, the stereotype is like the powerful man and the woman that's actually very important to him and he doesn't acknowledge and she just gets sick of it. the dynamic is kind of that. and amos, there's a line that amos writes to danny to me captures the spirit of amos' inability to deal with danny's emotion. he says i don't get your sensitivity metric. so i think there were limits. there were limits to amos'
12:21 am
emotional intelligence with danny. i think he thought just judging from the correspondence which i had my hands on that danny should not need the bucking up that he seemed to need. that it would be insulting to danny to condescend to danny to make him feel better. >> rose: how long did you work on this. >> eight year. >> rose: it's now 2016. >> i met him in 08. the honest answer, i met him in 07. >> rose: you met amos -- >> i met danny. >> rose: amos died in 1996. >> i got, i saw the book in my head by about 2010. and told danny and took me another couple years to kind of make him feel okay about it and then another year before i felt had the nerve myself to write it. so i really worked on it exclusively only for a couple years, two or three years. >> rose: did he say that he thought that a book about the two of them would overexaggerate the difference in their
12:22 am
characters. >> yes. he said in order to make it work on the page you have to exaggerate our differences. now i didn't. anybody who knows them and reads that will not say i did it. because the differences were, they were already so striking. danny is mow invested than anybody would imagine in that he was more similar to amos than understood. they were similar this some ways but not in ways and i point that out but not in the way that people around them really noticed. >> rose: go ahead. >> so he was, he justifiably had concerns that i would have to write them with caricature. there are concerns it's going to force him to relive the most painful, i mean it was wonderful
12:23 am
too, relationship in his life. because two incredibly, i mean world historic intellect, i think it's almost like a physical pain. >> rose: there's intense pain, it's no longer there. his intense sense of loss. >> yes, and regret. i think he has huge regret. >> rose: but he walked away. >> what they might have been able to do. he was working. there were two things they were working on. the undoing project is what they called what they were working on when they broke up. they were working on exploring the way the human imagination operated. and danny was also had this great idea really interesting idea to explore the difference between the happiness people anticipate from some good or experience compared to the happiness they actually experience in the moment compared to the happiness they remember from the experience.
12:24 am
how different forms of what economists would call utilities. so there's not one utility, there's like experience and expected and remembered. he wanted amos to do to work on this and it's work that didn't just get done. >> rose: the love that they felt simply love of one mind for of the and understanding i have met something really special. my mind has met another mind that's really special or did it have to do with a broader sense. you know i like everything about danny and danny thinks i like everything about him it's not just this sort of giant intellectual connection. >> no, it was more than intellectual. >> there was a very emotional connection. >> rose: what was that? >> well, i think for these kind of people, the intellectual connection is emotional. that the discovery of things in their own minds is as good as
12:25 am
sex and maybe better. and the feelings it generates when they realize the value of there own thoughts is intense. but i think, i mean they manage to laugh constantly. they made sense of the world around them together in a way they couldn't do it individually. >> rose: they did things together they couldn't have done separately. >> right. >> in terms of the way they looked at the world, in terms of everything. >> yes. in israel, they aren't just a couple of academic sitting there, they're glowing off fighting in a war and they're informing how their pilots and the arabs in their border. they're putting in practice things they're thinking. so it's real and relevant at the same time. the thoughts, this isn't too much of a stretch that the thoughts they have might help preserve this society and their culture. so -- >> rose: without together
12:26 am
they felt incomplete. >> i think that's true. i think they discovered something of themselves that they couldn't define anywhere else. you see both of them seeking spotterships after they split and none of them are even close. >> rose: this is from you what they were engaged in right from the beginning was undoing a false view man has in himself. the false view man has is he's always right. >> it's more that people are basically rational and the mind is a highly, is an exquisitely evolved tool that solves problems, is designed to solve all the problems. >> rose: what is it they found about the irrationality. if it's not rational it's irrational. irrational is produced by what, they didn't want to use the word rational they didn't want to get
12:27 am
into a debate what rationality was. it's suboptimal. maybe show how people say they prefer a to b and b to c but turn around and save they like c better than a. they would show the way people respond when they chose between things. they didn't choose between the thing they chose between descriptions of the things. can i give you a terrifying example. they did a study, amos did a study where the doctor illustrate the point the day amos had made that if a patient, you charlie, i tell you are, i'm the doctor you're the patient. we just get news that you have terminal cancer, you're going to kill you in six or seven years. but guess what, there's an operation we can do right now but we've got to do it now. but it's risky. and we got to decide whether we're going to do it. and if we the way this is presented to us, patient and doctor is that there's a 10%
12:28 am
chance you're going to die during this operation, we are half as likely to have the operation than if it's presented at the 90% chance you're going to survive the operation. >> rose: 90% -- >> one is a loss and one is basically a gain. you described the same thing, this is exact same thing. a chance of survival, 10% chance of death. the doctors changed their mind about whether to do this operation. so, i think it's fair to say that's irrational. >> rose: the frame of assumption in the question. frame the question -- >> the choices and decisions people make are heavily influenced bient kind of turk around they are making it. >> rose: for example when you go on holiday, the first two days are rainy and awful of the first five days and the last two days are sunny and wolfed. you can remember the sunny and
12:29 am
wonderful. so if you go in the first two days. >> this is a reviewer actually who said that. but this is danny did study, i mean who does this stuff. danny studies with people of colon os copies when they were painful. they were studying the question, they had this idea which turned out to be true. you and i go but the same colonoscopy and it takes two hours. we endure exactly the same amount of pain for those two hours. but at the end of those two hours they just say, at some intense level of pain they say charlie you're done you can go. but they keep me on the table for another hour enduring some pain but just less pain. i will have indured more total pain because i had that extra hour. because it end on a less miserable note i will remember it more fondly than you do and i'm more likely to go back for of the clock copy. you gave an example with pleasure i was giving with pain.
12:30 am
he called it the peak end rule. the way things end have a disproportionate influence over the people's experience of the event. movie makers know this. the ending is more important than the movie. how can people feel what's on the theatre with what's on the screen. that's why they test all the endings and not different middles. so this -- >> rose: is it a -- >> if i'm trying to get you to come back for another colonoscopy in five years, what i should do is make you string it out and make it worse than it has to be in order for it to end -- you can manipulate people choices and people's experiences that way. >> rose: what was startling that you discovered about what they knew. >> there's so many different little insights.
12:31 am
they have nuggets. there are a bunch of a lot of little nuggets they find along the trail. so the big thing that's hammered home from spending a lot of time with him how hard it is to preserve a proper sense of uncertainty about the world around you. how hard it is to not leap to conclusions, leap to overconfident guests, predictions about what's going to happen. and realize that there are so many different paths reality can take and as amos says, amos says reality is not a point, it's a cloud of possibilities that in any given time the world can go in lots of different directions, small and big ways. but we don't want to see it that way, we want to see it having been much more deterministic than it is. >> rose: one might listen to their own personal characteristics with the nature of amos and the nature of danny, danny being more doubtful and say that this is, this shows
12:32 am
that danny's personality is the prevailing question about the mind. it is more doubting. it is less certain. it is less whereas amos had gone through life -- >> totally certain. >> rose:-totally certain. being viewed as the most brilliant, the most right. >> and he was insufferable this way. >> rose: therefore danny is more reflective of the result they determine with the most accurate picture in mind. >> danny lived his life much more true to the work. that's absolutely right. this is absolutely true. but danny was the human embodiment of the work and amos was not. amos was jolted. it took danny's incredible capacity talent for doubt and questioning to jolt amos self certainty. and amos, just amos had a sense that whatever his instincts were
12:33 am
right. and in amos' case he was right. he was right about so much. but when he was wrong he didn't handle it well. he was not as the embodiment of the work that danny was. >> rose: we live in digital world today in which there is so much data out there. and there's a human giant industry growing up in terms of individual companies, individual institutions which is the capacity to analyze data gives you decision-making ability that you've never had before. that's data. the power of data. >> yes. the power of technology. >> rose: what are they saying about that? >> they would say it's all good in that they would say, it's partly a response to what we know. if human kind of government instincts were really great. like if they were right on all the time, you wouldn't need moneyball. you wouldn't need statistical
12:34 am
analysis of baseball players. >> rose: because moneyball was based -- >> on using statistics -- >> rose: as much as you could know. >> looking for knowledge about the player in the performance statistics. and the idea is only valuable if you can find things in the performance specifics that the human eye is missing. and the human eye was missing quite a bit. so the, their relationship to the big data movement is they kind of explain partly the power of big data, it's partly in response to the partly human intuition. partly. but partly it's actually being able to create new information but partly it's a response to human limitations. >> rose: take the people you wrote in moneyball. did they know the link when what they were doing and what danny and amos had done. >> this is funny.
12:35 am
i wouldn't have known, i wouldn't have thought to ask them. it turns out yes. paul depodesta who was the stack geek that brad pitt brings in, billy bean brought into the oakland a's. he was steand in behavioral economics, self taught which was responded by danny and amos' work. what interested him, they are taking advantage of these mistake in the marketplace. and he realized they were categories of mistakes. there were kinds of mistakes there were particular biases that they were exploiting so they needed to kind of know what those were so he was very aware of the work. the behavioral economics. funny enough the other channel of influence in moneyball was bill james. he was the original kind of
12:36 am
questionerhe was self published and world famous and works with the boston red sox. he was just looking at baseball players in new ways leaning a statistics. when i went through amos' file cabinets i found letters from bill james. >> rose: asking what? >> it was bill james interacting. amust was interacting in a three way conversation with a statistician at yale named robert ableson. and james and ableson were going back and forth and they were referring to amos and amos' work. it was in the air. they were present and i didn't realize it. so i think it was a very small world when james starts writing in the late 70's and early 80's people who are saying a lot of conventional wisdom's wrong and
12:37 am
now we have tools with computing power so we have tools for kind of showing how it's wrong. >> rose: does that scene from the cubs at the red sox was he a disciple of this. >> oh my god. he's a child. he would say i'm sure he would distance himself a little bit because politically you can't weld together the old baseball world with the new baseball world without some deferences to the old baseball world. he had a different kind of tight rope to walk than billy dean did than to just smash everything. there was theo epstein. there were things in the play offs general managers too heavily reliant on sophisticated statistical analysis. that's not to say there's not a role for human beings. it's just the role is differ
12:38 am
than historically it's been. >> rose: whatever's the role for human beings. >> gathering information that it's not in the algorithm. it's like you're about, it's nice to know when you're looking at say the performance statistics of a college player and he looks like he's great, that he has a cocaine addiction or that he got in a car accident the day before the draft. >> rose: have anything to do with the rise of artificial intelligence. >> funny you ask that because amos was asked that very question in 1981. and he turned to the interviewer and he said my work has less to do with artificial intelligence than it does natural stupidity. so i don't, i mean you can make an argument that the reason artificial intelligence is supplanting human intelligence and weakness for human intelligence is the argument for big data but they didn't see their work that way. >> rose: called the new field of behavioral economics. >> it drives psychologists crazy
12:39 am
because -- >> rose: exactly. >> it's cognitive psychology. >> rose: exactly. >> economists are really good at branding. that's why they're really good at branding. they grab the stuff. i mean look dick sailor is the bridge in economics for their work. and he has a lot of interesting ideas of his own. & he gave it the name behavioral economics. there was actually a discussion what are we going to call this. it's a fine name but it's not anywhere to psychology. >> rose: do they teach this at the harvard business school or stanford business school. >> oh my god absolutely. it's cat nip for these guys. they show them, actually interviewed a professor at the harvard business school and didn't find his way into the book because it wasn't part of narrative. what they do in the very beginning some of these teachers, they want to show the people with incoming class their minds are not as great as they think. and so what they do is, i mean this is one typical thing they
12:40 am
do in harvard business school beginning class. they say everybody write down your the last two digits of your cell phone number on your may and tuck it away. turn it in. i want you to estimate the percentage of countries in the united nations that are from africa. they this show the people who have high digits on their cell phones estimate higher numbers for the african -- >> rose: the last two digits are 78, say or 98. >> you might say that 28% of the countries in the un but the last two digits on your cell phone are zero two you might say 5%. >> rose: it tricks on i don't remember mind. >> they call this anchoring. i took a completely irrelevant information introduced before the question you're asking clears the answer to the question. >> rose: what's scary about this ... >> it's very scary. there's a lot that's scary. >> rose: exactly.
12:41 am
a lot of this stuff is in fact irrational. >> the mind that can do crazy things. >> rose: we're talking about all kinds of decisions that are made every day that may be life and death, that may have to do with the future of nations. may have to do with -- >> sentencing criminals. >> rose: have to do with great discoveries. all kinds of things. >> it's touched, they have touched so many spheres of human activity. and this is why i fell in love with this story. this relationship starts with the fire of the relationship leads to all that. >> rose: you quote voltaire. doubt is not a pleasant condition but certainty is an absurd one. i mean a loud condemnation of
12:42 am
certainty. >> yes. right at the center of what these guys are introducing into existence. if you ask like what advice can i get from your book. here's a piece of advice. my piece of advice if you're looking for people giving you advice whether es your political leader or your doctor or your financial advisor, if they are really really confident and totally sure what they're telling you in the direction of the stock market or the diagnosis of your disease or how they're going to fix the economy, counted against them. in fact, don't hire them. what you want is someone who has the capacity to doubt his own predictions because they are inherently, inherently fallible. they are not, we do not live in a deterministic world. something you can always come along and viz them and to retain hat capacity, that understanding that you can't, they might be wrong, that's a sign -- intelligence and honesty. >> rose: does what they discovered give you metrics or an understanding how to make
12:43 am
wiser decisions? >> there's two answers to that. one is no and the other's yes. so the no answer is they would say, i think that these cognitive illusions, the tricks of the mind are all optical ill looks. and that the way the mind fools like the way the eyes fool when you offer an optical illusion. even when someone shows you that the water on the desert highway is not water it's a mirage you still see the mirage, you don't stop seeing it. the cognitive ill look is like that. n't when they're pointed out pea still, it doesn't change. however, i tell you what i think. i think that they introduced paths to dealing with the weaknesses. and one of them is other people
12:44 am
are good at seeing your his takes. you made these tricks of optical illusions but they can see you being tricked. so creating a decision-making environment we have checks on you is a really really smart idea. and in practical ways they introduce that too lots of places. >> rose: malcolm gladwell said about that, he's a pretty good writer. >> great writer. >> rose: says he's in awe of you like watching tiger woods. are other people better at understanding your magic than you are? is it more simply industry for you rather than poetry and rather than do you know what i mean. >> it's not work for me so it's not industries because that implies work. i get enormous pleasure out of what i do, enormous pleasure. >> rose: you understand it. you understand what it is you have. >> i'm not an idiot savant. i do basically understand what i'm doing when i do it.
12:45 am
i don't feel, malcolm likes my books more than i do and i would actually, malcolm might have done a better job with this i think. i think my limitations as a writer and i bump up against them. i can see what i've got going for me too and i try to play to my strengths. >> rose: how do you define. >> i'm good at discriminating characters on a major and propelling a narrative for it that once you get them you can take them anywhere. and the feeling that trust that you create between writer and reader so they say well this is awfully weird there's algebra in the footnote on page 242 but i'm going to trust this is something i need to get through. you create the feeling they're not going to waste the reader's time and energy i think i do that pretty wrel. >> rose: take a look at this list. liar's poker, the money culture, pacific grip, loses the new new thing, next, moneyball, the blind side, home game, boomerang, the big short, flash boys and now this.
12:46 am
the undoing project. where do you put this? >> you know i never said this about a book before but it's the best book i've written. >> rose: because it's done better. >> the degree of difficulty was high. and also the quality of the teller and importance of the material it's off the charts. >> rose: when amos died what did he know? did he feel like oh may god, we're just getting going and here i am going away. >> the last thing he wanted to know was whether and i think there's some evidence that he kept himself alive just to find out was whether netanyahu was going to went his first election. when he waited for the election results heard them said i won't see peace in my lifetime but i never was going to anyway. and so -- >> rose: he was of the labor
12:47 am
side. >> that he and, they wrote about this, they wrote about the bias for hawkish behavior. >> rose: bias is something, that's part of what they said too. >> biases were the mistakes that the mind was, that the mechanism generated. you could know the mechanism by the mistakes they made. there are gazillion biases that have names but the ones they are responsible for naming like recently biased which means you're overwaiting the likelihood what's going to happen is happening again. if a hurricane hits new orleans and floods it, everybody for several years is thinking that's the thing that's going to happen next is another ter cane, terrorist attack. you're worried about the same terrorist attack instead of worrying about what's actually probably more likely have. >> rose: did danny give you access to his letter the same way you had access to amos' letters. >> he didn't have any. they were all burned in the open fire of 89. he lost everything. so he gave me access to what he acknowledge was i think what
12:48 am
he's actually saying was much worse than it actually is, prevend he had -- pretended he had a fallible memory. he had some stuff but amos' papers were the only papers i had access to. >> rose: what did you get from amos' papers. >> they were wonderful. >> rose: because. >> he's such a clear, he was such a clear personality. everything he did just expressed himself. every note he made on the major. he was still alive on the stuff but he kept letters between him and danny including both sides of the correspondence. that was really help 23678. helpful. >> rose: did he ever use the expression i love you? >> no, no. there's a manly reticence as danny put it. no. no but it's between every line. and amos had a thing with his papers. someone described the way he
12:49 am
handled his mail. amos didn't do anything he didn't want to do including opening a letter he didn't want to open. and he would have his stacks of mail for a week on the table. here's monday, tuesday, wednesday, thursday, friday, saturday. when new mail came, anything he hadn't opened from a week ago he just threw in the garbage can including dinner invitations, bills. he said if i hadn't owned it in a week it must not be important. he just can't keep stuff. so what he kept in those file cabinets was just, it was, there was it had meaning to it, there was a reason he kept it and so it was letters. it was letters and notes to himself about work he was doing. he did notes when they were breaking up. i have notes that he made in preparation for the phone call with danny, defending himself. he had lists of things danny was ker and he would make a list,t he's making a list of the charges danny's going to level at limb in the phone call and
12:50 am
his responses. yes. and even though it was all kind of shorthandy, a word here i knew exactly what he was talking about. >> rose: why did they say that the military would shape and influence their life. >> well, young men facing those kind of circumstances. i think more particularly, in danny, the vulnerability of the state, yes. amos found himself having to be very brave. he had shrapnel in his body whn he died. he said it's odd these kinds that are random acts of bravely when i was 19 defined me for the rest of my left. because everything thought i was brave i had to be braved for everything. danny's by nature, he would have been, if not for world war ii, he would have been an ethereal french intellect which and he would have been happy in the
12:51 am
academy and never out of it much israel forced him, the army forced him into the world. the first thing he does of real substance in the army in his early 20's, he does moneyball for israeli military. he redesigned the officer's selection system and had he still use the algorithm that he created to slick officers. so he got a sense of himself at a very young able at one who had big practical consequences. >> rose: what's the undoing project. >> it's what they were working on when they broke up. >> rose: which is. >> which is the danny had noticed after his nephew beloved nephew two weeks before his release had flown his fighter jet upside down in the ground and killed himself by mistake. he thought he was going up and something happened and he flew down. the way everybody has grief stricken, danny, big danny didn't experience the grief he
12:52 am
experienced he watched the grief. he stepped back from it. if only he had been released two days earlier. if only the flare hadn't gone off and blinded him in that moment. and he noticed there were rules to the way people undo the death of his nephew. they didn't say only if there wasn't an israeli air force. the imagine ace didn't go all the places it could go it followed some very specific channels. he and amos began to study the way people undid tragedy as a way to get at the human imagination worked and they started to establish some rules. if you wanted to do something and created an alternative reality you pick the thing that happened at the end and the first thing you work from the back in the end and you work backwards. the first thing you undo the change. you want to do this election much everybody went right to those e-mails. one is to goldman sachs or campaign strategy. >> rose: she went right -- >> that's the mind, there are a
12:53 am
million things that could have happened to change that. and people go, the macation as danny said is lazy. this is why when people watch sporting events your football team loses when the field goal kirk misses the 38 field goal. you blame the field goal kicker. he gets fired. bill buttner was ostracized in boston because he lost the game. he didn't lose the game. a thousand things could have happened that would have representeddered that ground ball meaningless. so they were explaining that. >> rose: finally what does danny think of the book? >> mixed emotions. but in the end, i think warmth and gratitude, that's where we are. that he said it's painful to relive the whole thing. i think he finds it painful to
12:54 am
revisit his character before he wins the nobel prize and but generally i mean it's a loving project and it's an admiring work. fine, we're having lunch in a couple weeks. and -- >> rose: first time you've seen him since the book was published. >> yes. >> rose: did hity it beforehand? i don't mean to -- >> no. so all the subjects of the books i've told him it's going to be a drawing experience because someone else recording your life and even if i get it exact here right you're going to feel the way you felt when you heard your voice on a tape recorder for the first time. it feels alien that's not me. i would just ask you to left people who know you well judge whether that's off or not off. and of course there's going to be some, it's not going to be perfect. but i think my sense is he thinks it's pretty close. at least he knows how hard i
12:55 am
tried. that's the big thing. he knows i gave it the old college try and that's not much else i could have done. >> rose: you had some doubt at the beginning. >> absolutely i had doubt what i was up. >> rose: he understands that. >> yes, he would. >> rose: thank you michael. >> thank you charlie. >> rose: the book is called the undoing project, a friendship, listen to these words, a friendship that changed our mind. michael lewis for the hour. thank you for joining us. we'll see you next time. captioning sponsored by rose communications captioned by media access group at wgbh
12:56 am
>> rose: funding for "charlie rose" has been provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide.
12:57 am
12:58 am
12:59 am
1:00 am
♪ this is "nightly business report" with tyler mathisen and sue herera. charging ahead. stocks close at records. the dow adds 1200 points since election day. and now the blue chip index is within striking distance of 20,000. hanging in the balance. an $85 billion deal has an uncertain future as the ceos of at&t and time warner try to make the case that the companies are better together. bidding war. why states may be getting ready to compete more intensely for business. those stories and more tonight on "nightly business report" for wednesday, december 7th. good evening, everyone. and welcome. a burst of buying led to a record day for stocks today. the dow gained nearly 300 pointsut