The Limits of Control

Leonard Mlodinow's recent book, The Drunkard's Walk: How Randomness Rules Our Lives, is a look, as the title suggests, at how the mathematical laws of randomness affect our lives. It covers probability theory in the first half and statistical inference in the second, all while giving a whirlwind tour of the history of mathematical ideas. All of this is done with little actual math and at an accessible level. More important, the book is engaging and fun to read.

William Easterly dedicated several posts to the book, and in one he relayed this interesting story (aid watch):

Laboratory experiments show that rats outperform humans in interpreting data, which is why we have today the US aid agency, the Millennium Challenge Corporation. Wait, I am getting ahead of myself, let me explain.

The amazing finding on rats is described in an equally amazing book by Leonard Mlodinow. The experiment consists of drawing green and red balls at random, with the probabilities rigged so that greens occur 75 percent of the time. The subject is asked to watch for a while and then predict whether the next ball will be green or red. The rats followed the optimal strategy of always predicting green (I am a little unclear how the rats communicated, but never mind). But the human subjects did not always predict green, they usually want to do better and predict when red will come up too, engaging in reasoning like “after three straight greens, we are due for a red.” As Mlodinow says, “humans usually try to guess the pattern, and in the process we allow ourselves to be outperformed by a rat.”

Yesterday Mlodinow had an interesting blog post at the NYT's Happy Days blog about our need for control, especially during temultous times. It's worth a quick read. On a more offbeat note, Mlodinow, who is a physics professor at CalTech, was also a writer for Star Trek: The Next Generation. Here is a recent Newsweek article about that experience and Hollywood economics more generally.

Below is his book talk at Google: