Saturday Serendipity
Quote, Mental Model, Interesting find.
Hi,
Reading time: About 4 minutes
Quote
"Judgment can do without knowledge but not knowledge without judgment. "- Montaigne
Mental Model
Variable Reinforcement theory
I came back after a long day of classes and practices and decided to go and scroll through X and Instagram. I came to my room at around 7 and before I knew it it was 8 o’clock. I spent the hour scrolling through a lot of content which I did not even like I just was in the hope of seeing something which I would like. On the off chance that I did see something I liked, I wanted to see more of it so I kept going.
Isn’t this weird?
I was not seeing reels or scrolling through X because I was loving the content I was seeing. I was seeing it because I expected to see something which blew my mind ‘the excitement of the unknown’.
Variable Reinforcement according to Safal Niveshak is,
“A response or action is called reinforced response if it generates a reward i.e., a person will be motivated to repeat a response if he or she gets a reward for the same. That’s the well known theory of motivation. However, when a response is reinforced after an unpredictable number of tries, it generates a high and steady rate of response. Which means, when you receive the reward with irregular or unpredictable frequency, your behavior is reinforced even more strongly.”
So when we see reels we experience the reward which can be whatever you desire at an unpredictable frequency. Hence why we get addicted.
Skinner’s expirement
"In 1950s, a scientist called B.F. Skinner validated the reinforcement theory by conducting experiments on mice. He observed that mice responded most voraciously to random rewards.
In one of his experiments, he selected two mice and fed them little differently. The first mouse was treated with same amount of food every time it pressed a lever. However to the second mouse, the supply of food was irregular and uneven. When this second mouse would press a lever, it would sometimes get a small reward, other times a large one, and sometimes nothing at all.
What Skinner observed that the second mouse pressed the lever compulsively when the food was given at irregular intervals. That established the theory of variable reinforcement.
Nir Eyal, author of the book Hooked: How to Build Habit-Forming Products, writes –
Humans, like the mice in Skinner’s box, crave predictability and struggle to find patterns, even when none exist. Variability is the brain’s cognitive nemesis and our minds make deduction of cause and effect a priority over other functions like self-control and moderation.
Variable rewards hook up our brains and keep it occupied. They sometimes create a trance like state for our minds. Variable reinforcement is used by a lot of sales and marketing people to keep you and me engaged with their products. Let’s find out where this mental model appears in the real world. "
Safal Niveshak.
In Gambling
When you gamble what keeps you going is not the fact that you are enjoying the game but the fact that you don’t know when you will win. The unpredictability of things like slot machines keeps you going till you win. (which can be never). There a ton of other biases in the mental model toolbox that apply to the addiction of gambling such as social proof, crave for dopamine, deprival super reaction tendency, etc.
In Investing
Prof Bakshi wrote on why the people who have a lot of activity in the markets even after so much disconfirming evidence continue to ignore the evidence,
“…reason why people resemble butterflies is because of the presence of a pleasure chemical called dopamine in our brains. The more the dopamine the more the pleasure. And novel experiences (imagine bungee jumping or a one-night stand) deliver enormous amounts of dopamine to the brain. The other thing that delivers dopamine is unexpected, pleasant surprises. And day traders get a lot of small, but pleasant surprises just like kids who are hooked to gaming. It gets addictive, this dopamine business. The more you get the more you crave for.
If you put a day trader who just had a winning bet in a fMRI machine and compare him with a cocaine addict, the doctors can’t tell the difference. Their brains look just the same. Behaving like a butterfly increases the probability of novel experiences. It increases the probability of small, unexpected surprises [variable reinforcements]. Warren Buffett has written that for many “investor-dreamers, any blind date is preferable to one with the girl next door, no matter how desirable she may be.” He is clearly on to something.”
Resources:
Interesting find
That’s it . Enjoy the weekend.
Thank you,
Samvit.