Re: Studies have shown that people are almost incapable of making the simplest decisions without emotions.

Re: Studies have shown that people are almost incapable of making the simplest decisions without emotions.
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Think of a situation where you had bulletproof facts, reason, and logic on your side, and believed there was absolutely no way the other person could say no to your perfectly constructed argument and proposal. To do so would be impossible, you figured, because there was no other logical solution or answer.
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And then the other person dug in his heels and refused to budge. He wasn’t swayed by your logic. Were you flabbergasted?
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This is similar to what many negotiators do when they sit down at the table to hammer out a deal. They come armed with facts, and they attempt to use logic to sway the other party. They figure that by piling on the data and using reason to explain their side of the situation, they can construct a solution that is simply irrefutable—and get the other party to say yes.
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They’re doomed to fail, however, because decision-making isn’t logical, it’s emotional, according to the latest findings in neuroscience.
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A few years ago, neuroscientist Antonio Damasio made a groundbreaking discovery. He studied people with damage in the part of the brain where emotions are generated. He found that they seemed normal, except that they were not able to feel emotions. But they all had something peculiar in common: they couldn’t make decisions. They could describe what they should be doing in logical terms, yet they found it very difficult to make even simple decisions, such as what to eat. Many decisions have pros and cons on both sides—shall I have the chicken or the turkey? With no rational way to decide, these test subjects were unable to arrive at a decision.
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So at the point of decision, emotions are very important for choosing. In fact even with what we believe are logical decisions, the very point of choice is arguably always based on emotion.
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This finding has enormous implications for negotiation professionals. People who believe they can build a case for their side using reason are doomed to be poor negotiators, because they don’t understand the real factors that are driving the other party to come to a decision. Those who base their negotiation strategy on logic end up relying on assumptions, guesses, and opinions. If my side of the argument is logical, they figure, then the other side can’t argue with it and is bound to come around to my way of thinking. The problem is, you can’t assume that the other party will see things your way.
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What the negotiator can and must do, however, is create a vision for the other side to bring about discovery and decision on their part. In the end, your opponent will make the decision because he wants to. Getting him to want to, using the step-by-step methodology that is part of the Camp System, is the job of the negotiator—not trying to convince him with reason.
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You don’t tell your opponent what to think or what’s best. You help them discover for themselves what feels right and best and most advantageous to them. Their ultimate decision is based on self-interest. That’s emotional. I want this. This is good for me and my side.

There’s a detailed and systematic way to go about building vision the right way. But in general, if you can get the other party to reveal their problems, pain, and unmet objectives, then you can build a vision for them of their problem, with you and your proposal as the solution. They won’t make their decision because it is logical. They’ll make their decision because you have helped them feel that it’s to their advantage to do so.
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Charlie Munger

And Charlie Munger's take:
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The model I like—to sort of simplify the notion of what goes on in a market for common stocks—is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what's bet. That's what happens in the stock market.
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Any damn fool can see that a horse carrying a light weight with a wonderful win rate and a good post position etc., etc. is way more likely to win than a horse with a terrible record and extra weight and so on and so on. But if you look at the odds, the bad horse pays 100 to 1, whereas the good horse pays 3 to 2. Then it's not clear which is statistically the best bet using the mathematics of Fermat and Pascal. The prices have changed in such a way that it's very hard to beat the system.
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And then the track is taking 17% off the top. So not only do you have to outwit all the other betters, but you've got to outwit them by such a big margin that on average, you can afford to take 17% of your gross bets off the top and give it to the house before the rest of your money can be put to work.
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Given those mathematics, is it possible to beat the horses only using one's intelligence? Intelligence should give some edge, because lots of people who don't know anything go out and bet lucky numbers and so forth. Therefore, somebody who really thinks about nothing but horse performance and is shrewd and mathematical could have a very considerable edge, in the absence of the frictional cost caused by the house take.
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Unfortunately, what a shrewd horseplayer's edge does in most cases is to reduce his average loss over a season of betting from the 17% that he would lose if he got the average result to maybe 10%. However, there are actually a few people who can beat the game after paying the full 17%.
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I used to play poker when I was young with a guy who made a substantial living doing nothing but bet harness races…. Now, harness racing is a relatively inefficient market. You don't have the depth of intelligence betting on harness races that you do on regular races. What my poker pal would do was to think about harness races as his main profession. And he would bet only occasionally when he saw some mispriced bet available. And by doing that, after paying the full handle to the house—which I presume was around 17%—he made a substantial living.
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You have to say that's rare. However, the market was not perfectly efficient. And if it weren't for that big 17% handle, lots of people would regularly be beating lots of other people at the horse races. It's efficient, yes. But it's not perfectly efficient. And with enough shrewdness and fanaticism, some people will get better results than others.
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The stock market is the same way—except that the house handle is so much lower. If you take transaction costs—the spread between the bid and the ask plus the commissions—and if you don't trade too actively, you're talking about fairly low transaction costs. So that with enough fanaticism and enough discipline, some of the shrewd people are going to get way better results than average in the nature of things.
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It is not a bit easy. And, of course, 50% will end up in the bottom half and 70% will end up in the bottom 70%. But some people will have an advantage. And in a fairly low transaction cost operation, they will get better than average results in stock picking.
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How do you get to be one of those who is a winner—in a relative sense—instead of a loser?
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Here again, look at the pari-mutuel system. I had dinner last night by absolute accident with the president of Santa Anita. He says that there are two or three betters who have a credit arrangement with them, now that they have off-track betting, who are actually beating the house. They're sending money out net after the full handle—a lot of it to Las Vegas, by the way—to people who are actually winning slightly, net, after paying the full handle. They're that shrewd about something with as much unpredictability as horse racing.
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And the one thing that all those winning betters in the whole history of people who've beaten the pari-mutuel system have is quite simple. They bet very seldom.
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It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it—who look and sift the world for a mispriced be—that they can occasionally find one.
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And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple.
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That is a very simple concept. And to me it's obviously right—based on experience not only from the pari-mutuel system, but everywhere else.
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And yet, in investment management, practically nobody operates that way. We operate that way—I'm talking about Buffett and Munger. And we're not alone in the world. But a huge majority of people have some other crazy construct in their heads. And instead of waiting for a near cinch and loading up, they apparently ascribe to the theory that if they work a little harder or hire more business school students, they'll come to know everything about everything all the time.
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Silver concludes, “Finding patterns is easy in any kind of data-rich environment; that's what mediocre gamblers do. The key is in determining whether the patterns represent signal or noise.”
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All the World's a Stage

All the World's a Stage



The meaning of this phrase is that this world is like a stage show, and all human beings are merely actors.



Jacques has spoken this famous phrase in Act-II, Scene-VII of the play As You Like It. He says, “All the world's a stage,/ And all the men and women merely players.” The meaning of this phrase is that this world is like a stage show, and all human beings are merely actors.