Motley Fool Hidden Gems Investing - Michael Lewis on the Two Men Who Changed Our Minds

Episode Date: July 21, 2020

Other than their fields of study Daniel Kahneman and Amos Tversky could hardly be more different. In The Undoing Project: A Friendship that Changed Our Minds, best-selling author Michael Lewis shares how these two Israeli psychologists surprised their colleagues by not only working together, but also enjoying the process.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. With The Motley Fool Money Extra, I'm Chris Hill. Michael Lewis is known for writing bestselling books like The Big Short and Moneyball. A few years back, I talked with him about The Undoing Project, a friendship that changed our minds. The book focuses on the relationship between two Israeli psychologists who created the field of behavioral economics, Daniel Kahneman and Amos Tversky. Considering their differences, it's amazing they were able to work together. Tversky was an extrovert, very self-confident, very comfortable being the center of attention. Daniel Kahneman isn't just introverted, he's a man plagued with self-doubt. Two men so different, you wonder how they even got along. Well, I'd say the big difference is

is an ability to know at a deep level when you're dealing with an uncertain situation, some judgment you have to make, some risk you have to take, that all you can control is the process, that the outcome is inherently unpredictable. And so what you do is you bring that spirit of confidence to the creation of a really good process. You don't bring it to, oh, I'm going to promise an outcome. The manifestation in the markets of overconfidence is people trading too much. People make way more decisions than they should make because they think their decisions are good. And that's, you know, that's the deadliness of overconfidence is making decisions you don't need to make.

You can find The Undoing Project everywhere you find books. And it was written by Michael Lewis, so you know it's good. I'm Chris Hill, thanks for listening, we'll see you next time.