like if they were right on all the time, you wouldn't need moneyball. you wouldn't need statistical 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. 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

michael: i had written "moneyball." which was about the way in my mind that markets misvalue people, in this case baseball , players. there were cheap ones and expensive ones. my interest was of that. if baseball players can be misjudged, who cannot be? question, whythe it happened. in a review after the book came out in the new republic, they said basically -- michael lewis has written a good story but he does not seem to understand there is a good source for all of this stuff. there are two israeli psychologists that did work on the biases, the cognitive biases of the human mind that lead to things like baseball players and political candidates being misjudged and doctors misdiagnosing diseases. charlie: and most important how the mind works. michael: these two guys are named daniel kahneman and amos tversky. i read some of that stuff. i was embarrassed i had not heard of them. daniel kahneman had just won thw nobel prize for economics. even though he was not an economist. finally i was having drinks with , a psycholo

moneyball, i discover after i wrote moneyball, basically comes from them in a funny way in the sense that you have these baseball players that are being misvalued by professional sports team industry, how does it happen? how do people get misjudged that way? and these guys described the psychology of what's going on in the mind when people make that misjudgments that were being made that were described in "moneyball." >> the basic theory here and in the context of rational humans. we evolve all sorts of what they call biases to deal with this very complex world which help us usually but then lead to blind spots. >> so our mind naturally wants the world to be a more certain place than it is. >> right. >> right? that we don't operate as probabilistic kind of machines. we don't. even though we're often in improbablistic situations. >> always. >> instead of actually doing the statistics, what we do as we move through life is tell story. find patterns. after the fact when we're wrong we tell a story that explains why we're wrong and covers up the whole problem. so these guys were describi

i had written "moneyball." which was about the way in my might that markets miss value people including baseball players. there were cheap ones and expensive ones. my interest was on account of that. why is baseball players can be misjudged, who cannot be. i never asked a question of why it happened. in a review after the book came in the new republic, they said basically -- michael lewis has written a good story but he does not seem to understand there is a good source for all of this stuff. there are two israeli psychologists that did work on the biases, the cognitive biases of the mind. including when clinical candidates are being misjudged. charlie: and most important how the mind works. michael: these two guys are named daniel kahneman and amos tversky. i read some of that stuff. i was embarrassed i did not know them. won theahneman had just nobel prize for economics. i was having drinks with a psychology professor friend of mine. i dedicated the book to him. i said this has been working -- irking me. kahn

moneyball, i discover after i wrote moneyball, basically comes from them in a funny way in the sense that you have these baseball players that are being misvalued by professional sports team industry, how does it happen? how do people get misjudged that way? and these guys described the psychology of what's going on in the mind when people make that misjudgments that were being made that were described in "moneyball." >> the basic theory here and in the context of rational humans. we evolve all sorts of what they call biases to deal with this very complex world which help us usually but then lead to blind spots. >> so our mind naturally wants the world to be a more certain place than it is. >> right. >> right? that we don't operate as probabilistic kind of machines. we don't. even though we're often in improbablistic situations. >> always. >> instead of actually doing the statistics, what we do as we move through life is tell story. find patterns. after the fact when we're wrong we tell a story that explains y we're wrong and covers up the whole problem. so these guys were describing

michael: i had written "moneyball." which was about the way in my mind that markets misvalue people, in this case baseball

i really missed something big when i was writing "moneyball." >> "moneyball" made into a movie starring brad pitt, describes how billy beane, general manager of the oakland a's built a winning team by ignoring the gut instincts of experienced major leagues scouts and instead using data analysis to find good players who were under valued by other teams. >> if we win on our budget with this team, we'll change the game. >> if they could be miss valued by experts in valuing them, who is left? you're probably misvalued. >> under valued more sure. >> the question is like, why does that happen? >> how can the gut instincts of apparent experts, and all of us for that matter, often be so wrong? that question is what kahneman and material see studied for decades. they changed the way we think about thinking. >> what they were engaged in right from the beginning was undoing a false view man has in himself. the view that the mind is somehow rational and untrickable and potentially infallible. they took dead aim at it and they dealt it a death blow. >> what tapeti rated lewis was their relationship.

i really missed something big when i was writing "moneyball." >> "moneyball" made into a movie starring brad pitt, describes how billy beane, general manager of the oakland a's built a instincts of experienced major leagues scouts and insteads uing data analysis to find good players who were under valued by other teams. >> if we win on our budget with this team, we'll change the game. >> if they could be miss valued by experts in valuing them, who is left? you're probably misvalued. >> under valued more sure. >> the question is like, why does that happen? >> how can the gut instincts of apparent experts, and all of us for that matter, often be so wrong? that question is what kahneman and material see studied for decades. they changed the way we think about thinking. >> what they were engaged in right from the beginning was undoing a false view man has in himself. the view that the mind is somehow rational and untrickable and potentially infallible. they took dead aim at it and >> what tapeti rated lewis was their relationship. they met in the psychology department at hebrew university,

i really missed something big when i was writing "moneyball." >> "moneyball" made into a movie starring brad pitt, describes winning team by ignoring the gut instincts of experienced major leagues scouts and instead using data analysis to find good players who were under valued by other teams. >> if we win on our budget with this team, we'll change the game. >> if they could be miss valued by experts in valuing them, who is left? you're probably misvalued. >> under valued more sure. does that happen? >> how can the gut instincts of apparent experts, and all of us for that matter, often be so wrong? that question is what kahneman and material see studied for decades. they changed the way we think about thinking. >> what they were engaged in right from the beginning was undoing a false view man has in himself. the view that the mind is somehow rational and untrickable they dealt it a death blow. >> what tapeti rated lewis was their relationship. they met in the psychology department at hebrew university, eventually both moved to universities in nor america. >> meter on his own was airibly

their work helps explain what goes on in financial crises and and also stories like "moneyball." jane: but how does it do that? --re is one floatation quotation, they changed the way people think about how people think. what does that mean? michael: they were the first to systematically explore the mistakes people make, the uncertain situation, a judgment of who to hire for a job or what investment to make or who to vote for for president. they show that people systematically do make mistakes, and that instead of thinking probabilistically about the world, people tell stories, and the way they tell stories is warped by the way memory works, by the fact they think in stereotypes, all sorts of things that these guys explore. that is a big deal. it means that if people can be systematically wrong, markets can be systematically wrong. jane: it sounds as if this could have turned into a self-help book about decision-making, but actually, the story is their relationship, isn't it? this extraordinary relationship. they were soul mates. michael: there is no question i have no interest in

nothing has changed since moneyball. michael: it has. i do not know if chris say this is worth what they gave up, but it is possible he is. the bigger point is the counterweight to the misjudgments of the experts is tohave a statistics analyst actually grind the numbers and give you a better sense of the probability of the future performance of a baseball or basketball player. this has swept sports. for the reasons these guys describe because experts leading with judgment make errors. tom: michael, really challenging views of the markets. he was a character in the movie "the big short." to the characters of "the big short" to the undoing project? michael: the one character to establish connection between that character and these guys is michael barry's character. people know more in the movie, the character christian bale world and he was -- the was saying this and he does nothing but look at the numbers what is being packaged into subprime mortgage bonds and being replicated over and over in credit default swaps 'sat actually the world'

it was like money call for moneyball for presidents. it would have every last line, however long they lived to the day after their inauguration, how long their mother's list, where they came from. anyway, it came this sort of thing for me, i was the "moneyball" kid for presidents as a little kid and they would show me off at parties. but then my father, wherever we would drive would be these historical markers, right? we would have to stop and read it, whatever it was. sometimes he would make me read it aloud and of course i plagued my kids the same way. so, that of course gets you to jeopardy level thin but long at the top. brian: what about mom teaching you how to laugh? mr. strauss: that is really important because i do not think you can really be successful unless you can laugh at yourself. my thought is, especially writing a book like this, you have to sort of take the opposite view. you have to take the contrarian view. say, not everybody was an amazing success, not everybody -- every biography has to be about washington and linco

( cheers and applause ) folks, my next guest is the best-selling author of the blind side, moneyball and "the big short." his latest book, "the undoing project," is so new it hasn't even been made into a movie yet. please welcome michael lewis! ? >> stephen: nice to see you. good too see you. pleasure to be back. >> stephen: happy to have you here. you're one to have the best explainers in the world. i need something explained to me, you're the person i want to have to do it. explain something to me if you all-time high, 19,216 and some change, okay? people are talking about a trump bump. why and what is it? do you have any these are? >> i've given this a shot but -- >> stephen: people were afraid it would dump but there is been a bump. >> and nobody knew it was going to happen, right? so one of the things my book is about -- not to get to my book right away. we'll come back to it, i know. >> stephen: we'll just get it. it's called "the undoing project." ( cheers and applause ) >> i wasn't trying to plug the book, but actually -- >> stephen: i want to plug the book. >> -- one of the

( cheers and applause ) folks, my next guest is the best-selling author of the blind side, moneyball and "the big short." his latest book, "the undoing project," is so new it hasn't even been made into a movie yet. please welcome michael ( cheers and applause ) ? >> stephen: nice to see you. good too see you. pleasure to be back. >> stephen: happy to have you here. you're one to have the best explainers in the world. i need something explained to me, you're the person i want to have to do it. don't mind. stock market closed at an all-time high, 19,216 and some change, okay? people are talking about a trump bump. why and what is it? do you have any these are? >> i've given this a shot but -- >> stephen: people were afraid it would dump but there is been a bump. >> and nobody knew it was going to happen, right? so one of the things my book is about -- not to get to my book right away. we'll come back to it, >> stephen: we'll just get to it. it's called "the undoing project." ( cheers and applause ) >> i wasn't trying to plug the book, but actually -- >> stephen: i want to plug the book

( cheers and applause ) folks, my next guest is the best-selling author of the blind side, moneyball and "the big short." his latest book, "the undoing project," is so new it hasn't even been made into a movie yet. please welcome michael lewis! ( cheers and applause ) ♪ >> stephen: nice to see you. good too see you. pleasure to be back. >> stephen: happy to have you here. you're one to have the best explainers in the world. i need something explained to me, you're the person i want to have to do it. explain something to me if you don't mind. stock market closed at an all-time high, 19,216 and some change, okay? people are talking about a trump bump. why and what is it? do you have any these are? >> i've given this a shot but -- >> stephen: people were afraid it would dump but there is been a bump. >> and nobody knew it was going to happen, right? so one of the things my book is about -- not to get to my book right away. we'll come back to it, i know. >> stephen: we'll just get to it. it's called "the undoing project." ( cheers and applause ) >> i wasn't trying to plug the book, but

tomorrow on bloomberg, do not miss a conversation with the author behind moneyball and the big short. he joins daybreak america on his newest book, the undoing project. coming up, we discussed the impact of brexit and trump. but that will have on the tech sector. this is bloomberg. ♪ emily: facebook's oculus came out with its long-awaited hand controllers this week, called touch. this is meant to let gamers use their hands while wearing the headsets, creating an even more immersive virtual experience. the ceo of set down with charlie rose this week and spoke about how the potential for vr goes far beyond video games. >> imagine if medical students in their o d they are studying could put on a pair of glasses and could do simulated surgery again and again. on that long, they could run through dozens of procedures and continue to get better, all in just a dorm room. this will allow us to advance some us after the than may have just off of textbooks or a screen. emily: you can catch the full interview on charlie -- on charlie rose later on bloomberg television. in today's edition of ou

in sports, what you get is moneyball. thatet an understanding the miss valuation of professional athletes, baseball players, by the marketplace is a systematic misjudgment by experts about the value of players. >> so this is not about the boston red sox buying the gentleman from the chicago white sox. overvaluingudgment, others, itvaluing grows out of basic processes in human mind which these guys describe. >> the yankees paid $80 million for somebody. nothing has changed since moneyball. >> well, it has changed. i don't know if chris sale is worth what they gave up for him. i don't know. it's possible he is. but the bigger point is, the counterweight to the misjudgment of the experts is to have a to actuallynalyst grind the numbers and give you a better sense of the probability, the value of a future player. this has swept sports, for the reasons that these guys describe. expert using intuitive judgment make errors. ago, we had some really challenging views of the market. he was a character in the movie "the big short."

tomorrow on bloomberg, do not miss a conversation with the author behind moneyball and the big short. he joins daybreak america on his newest book, the undoing project. coming up, we discussed the impact of brexit and trump. but that will have on the tech sector. this is bloomberg. ♪ oculus cameook's out with its long-awaited hand controllers this week, called touch. this is meant to let gamers use their hands while wearing the headsets, creating an even more immersive virtual experience. the ceo of set down with charlie rose this week and spoke about how the potential for vr goes far beyond video games. >> imagine if medical students in their own dorm rooms that they are studying could put on a pair of glasses and could do simulated surgery again and again. on that long, they could run through dozens of procedures and continue to get better, all in just a dorm room. this will allow us to advance some us after the than may have just off of textbooks or a screen. emily: you can catch the full interview on charlie -- on charlie rose later on bloomberg television. in today's edition of

. >> moneyball was a great example. you have the oakland a's looking for bargains in the you have all of this data attached to baseball players when they are on the job. the experts supposedly know what they are doing when they pick the baseball players. they figured out if you focused on players that didn't look like baseball players, fat, short or physically off about them you were likely to find, more likely to find a bargain because even experts had a stereotype of what baseball players looked like. i think we do this with all jobs. 60% of ceos of fortune 500 companies are white men 6'0" and taller. what's the likelihood of what a ceo looks like. they just -- one of the things they point out is the power of stereotypes to deceive people in those judgments. what's depressing about this in some ways is you point out this is how the human mind works. they have find it is predictable we will be irrational and irrational in predictable ways. what does that mean for those of us who believe in rationalism that you should s

anyway, it came this sort of thing for me, i was the "moneyball" kid for presidents as a little kid and they would show me off at parties. but then my father, wherever we would drive would be these historical markers, right? we would have to stop and read it, whatever it was. it sometimes he would make me read it aloud and of course i my kids the same way. so, that of course gets you to jeopardy level thin but long at the top. brian: what about mom teaching you how to laugh? mr. strauss: that is really important because i do not think you can really be successful unless you can laugh at yourself. my thought is, especially writing a book like this, you have to sort of take the opposite view. you have to take the contrarian view. say, not everybody was an amazing success, not everybody can be like washington and lincoln. the reason why i chose to do this, not why i chose buchanan but why i chose to do this, i do think you can learn from failure. i think if the next president wants to aspire to be like somebody, probably washington or lincoln. you cannot re-create the country and you canno

scarlet: we go from baseball to moneyball. author michael lewis is out with a new book that explores the rise of behavioral economics. we get thoughts on his book as well as president-elect donald trump. this is bloomberg. ♪ scarlet: i'm solid through. "what'd you miss?" -- i'm scarlet fu. "what'd you miss?" michael lewis' newest book is "the undoing project." it is about undoing our perceptions about the decision-making process. tom keene asked michael lewis about behavioral economics. >> one of the things that was really interesting to me in doing the book was the effort people had made to keep him alive, that he made such an impression on people's minds that they do not want to lose him because there are so many people who knew him that when they face a problem, they ask themselves, what would amos say? it is their way of looking at the world. presence, heicals is a relic. the stuff you left behind in the world. tom: it is essentially lennon and mccartney. they were that an extra quickly linked. you have the tragedy of hi

it's still my favorite book in a certain way and it was like "moneyball" for presidents. it would have ever last line, long they lived to the day after their inauguration, long their mothers lived, where they came from. guy for the "moneyball" presidents as a little kid and they'd show me off at parties father, whenever we'd drive, there will be some thatese historical markers still exist and we'd have to stop and read it, whatever it was. sometimes he'd make me read it my kidsd i've plagued the same way. that, of course, gets you to "jeopardy!" level, thin but long, the top. host: what about about mom teaching you how to laugh? guest: that's really important. because i don't think you can successful unless you can laugh at yourself. thought is, especially writing a book like this, you the to sort of take opposite view. you have to sort of take the say, notn's view to everybody was an amazing success. has to bebiography about washington and lincoln. do reason why i chose to this, forget about why i chose why i chose to do this is i do think you can learn from failure. pre

it's the story behind moneyball, the story that inatienables the oakland a's to build on players nobody wants. >> michael, this is exactly the war that is still going on, except that the guys who don't believe in analytics are losing the war in baseball. where the old-school managers have finally just had to give in to analytics because they've got all these young general managers and all these guys sitting with their ipads telling them why this second baseman is better than another second baseman. >> it's not just baseball. baseball is a purest case, i think. you can see it so cleanly. because the data is so clean, because people win and people lose. >> and the numbers. there's numbers all over the place in baseball. >> they're reliable numbers. >> how do we apply it to, let's say -- >> economics. >> economics or being a ceo, picking the right leaders or if you're a president of a university, how do we apply what's in this book with the leadership in those areas? >> i mean, so money ball is just a little piece of this book. but how do you apply, like, an understanding of how the human