Iconoclast: A Neuroscientist Reveals How to Think Differently (32 page)

Four: How Fear Distorts Perception

1.
See Presidential Commission on the Space Shuttle Challenger Accident,
Report of the Presidential Commission on the Space Shuttle Challenger Accident
(Washington, DC: Presidential Commission on the Space Shuttle Challenger Accident, 1986).

2.
Ibid.

3.
See James Gleick,
Genius: The Life and Science of Richard Feynman
(New York: Pantheon Books, 1982).

4.
Ibid.

5.
Ibid., 140.

6.
Ibid., 184.

7.
See Richard P. Feynman and Ralph Leighton,
“Surely, You’re Joking, Mr. Feynman!” Adventures of a Curious Character
(New York: W.W. Norton & Company, 1985).

8.
Ibid., 134.

9.
This section was reconstructed from Asch’s published observations of the experiment and his subjects’ reactions. See Solomon E. Asch, “Effects of Group Pressure upon the Modification and Distortion of Judgments,” in
Groups, Leadership and Men: Research in Human Relations
, ed. H. S. Guetzkow (Pittsburgh, PA: Carnegie Press, 1951);Solomon E. Asch,
Social Psychology
(New York: Prentice-Hall, 1952);and Solomon E. Asch, “Studies of Independence and Conformity: I. A Minority of One Against a Unanimous Majority,”
Psychological Monographs: General and Applied
70, no. 9 (1956): 1–70.

10.
See Gregory S. Berns et al., “Neurobiological Correlates of Social Conformity and Independence During Mental Rotation,”
Biological Psychiatry
58 (2005): 245–253.

11.
Martin Luther King, Nobel Lecture, December 11, 1964.

12.
Ibid.

13.
In actuality, the bell-shaped curve will be skewed because the left-hand side is bounded by zero, while the right-hand side is unbounded.

14.
See Scott E. Page,
The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies
(Princeton, NJ: Princeton University Press, 2007).

15.
James Surowiecki made much of this statistical law and even went as far as suggesting that individual decision making will always be worse than collective decision making, at least when the members of a group act independently of one another. See James Surowiecki,
The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economics, Societies, and Nations
(New York: Doubleday, 2004).

Five: Why the Fear of Failure Makes People Risk Averse

1.
Standard & Poor’s Mutual Fund Persistence Scorecard, midyear 2006.

2.
The game is called the St. Petersburg paradox because Bernoulli published it in the
Papers of the Imperial Academy of Sciences in Petersburg:
Daniel Bernoulli, “Exposition of a New Theory on the Measurement of Risk,”
Econometrica
22, no. 1 (1738; 1954): 23–36. The paradox was originally formulated by Bernoulli’s cousin, Nicolas Bernoulli, but Daniel gets credit for proposing a solution.

3.
John von Neumann and Oskar Morgenstern,
The Theory of Games and Economic Behavior
, 2nd ed. (Princeton, NJ: Princeton University Press, 1947).

4.
Quotes in this section from David Dreman, telephone interview with author October 4, 2006.

5.
The steady-state value is 1/(cost of capital). See Michael J. Mauboussin, “M&M on Valuation,” in
Mauboussin on Strategy
, ed. M. J. Mauboussin (Baltimore: Legg Mason Capital Management, 2005); and Merton H. Miller and Franco Modigliani, “Dividend Policy, Growth, and the Valuation of Shares,”
Journal of Business
34, no. 4 (1961): 411–433.

6.
See Mauboussin, “M&M on Valuation.”

7.
See Kirk Kazanjian,
Value Investing with the Masters: Revealing Interviews with 20 Market-Beating Managers Who Have Stood the Test of Time
(New York: New York Institute of Finance, 2002).

8.
Quoted in Kazanjian,
Value Investing with the Masters
.

9.
See Gregory S. Berns et al., “Neurobiological Substrates of Dread,”
Science
312 (2006): 754–758.

10.
See Andrew W. Lo and Dmitry V. Repin, “The Psychophysiology of Real-Time Financial Risk Processing,”
Journal of Cognitive Neuroscience
14, no. 3 (2002): 323–339.

11.
See Andrew W. Lo, Dmitry V. Repin, and Brett N. Steenbarger, “Fear and Greed in Financial Markets: A Clinical Study of Day-Traders,”
American Economic Review
95, no. 2 (2005): 352–359.

12.
See Henry Ford,
My Life and Work
(Garden City, NY: Doubleday, Page & Company, 1923).

13.
Ibid.

14.
Ibid.

15.
The DAT gene has two common forms, with either a 9 or a 10 repeat (9R or 10R) of a 40-base pair sequence near its tail end.

16.
See Juliana Yacubian et al., “Gene-Gene Interaction Associated with Neural Reward Sensitivity,”
Proceedings of the National Academy of Sciences
104, no. 19 (2007): 8125–8130.

Six: Brain Circuits for Social Networking

1.
Picasso’s
Garçon à la pipe
went for $104 million at Sotheby’s in 2004, while Van Gogh’s
Portrait of Dr. Gachet
sold for $82.5 million at Christie’s in 1990 ($119 million in 2004 dollars).

2.
See Malcolm Gladwell,
The Tipping Point: How Little Things Can Make a Big Difference
(New York: Little, Brown and Company, 2000).

3.
For the definitive biography on Stanley Milgram, see Thomas Blass,
The Man Who Shocked the World: The Life and Legacy of Stanley Milgram
(New York: Basic Books, 2004).

4.
Letter to Marilyn Zeitlin, reprinted in Blass,
The Man Who Shocked the World
, 58.

5.
The term was popularized by John Guare in his play
Six Degrees of Separation
(New York: Random House, 1990).

6.
A set of stamped postcards was included in the packet, and each person who received it was instructed to put his or her name on a postcard and mail it back to Milgram. In this manner, Milgram was able to track the steps that each packet took on its way to Boston. To prevent a packet from endlessly looping between the same people, Milgram asked each recipient to add their name to a roster that was enclosed as part of the packet, with the additional instruction to send the packet to someone not already on the roster.

7.
See Stanley Milgram, “The Small World Problem,”
Psychology Today
1 (1967): 61–67; and Jeffery Travers and Stanley Milgram, “An Experimental Study of the Small World Problem,”
Sociometry
32, no. 4 (1969): 425–443.

8.
Quoted in Eric Schlosser,
Fast Food Nation: The Dark Side of the All-American Meal
(New York: Perennial, 2002).

9.
Ibid.

10.
See Nancy Etcoff,
Survival of the Prettiest: The Science of Beauty
(New York: Anchor Books, 1999).

11.
See M. Ida Gobbini and James V. Haxby, “Neural Systems for Recognition of Familiar Faces,”
Neuropsychologic
45 (2007): 32–41.

12.
See J. P. Mitchell, T. F. Heatherton, and C. N. Macrae, “Distinct Neural Systems Subserve Person and Object Knowledge,”
Proceedings of the National Academy of Sciences, U.S.A
. 99 (2002): 15238–15243;Chris D. Frith and Uta Frith, “Interacting Minds-A Biological Basis,”
Science
286 (1999): 1692–1695; and Truett Allison, Aina Puce, and Gregory McCarthy, “Social Perception from Visual Cues: Role of the STS Region,”
Trends in Cognitive Sciences
4, no. 7 (200): 267–278.

13.
See D. I. Perrett et al., “Organization and Functions of Cells Responsive to Faces in the Temporal Cortex,”
Philosophical Transactions of the Royal Society, London, B
335 (1992): 23–30.

14.
See Ralph Adolphs, Daniel Tranel, and Antonio R. Damasio, “The Human Amygdala in Social Judgment,”
Nature
393 (1998): 470–474.

15.
See H. Kluver and P. C. Bucy, “Preliminary Analysis of Functions of the Temporal Lobes in Monkeys,”
Archives of Neurology and Psychiatry
42 (1939): 979–1000.

16.
See David G. Amaral, “The Amygdala, Social Behavior, and Danger Detection,”
Annals of the New York Academy of Sciences
1000 (2003): 337–347.

17.
See Elizabeth A. Phelps et al., “Performance on Indirect Measures of Race Evaluation Predicts Amygdala Activation,”
Journal of Cognitive Neuroscience
12, no. 5 (2000): 729–738.

18.
See Andreas Olsson et al., “The Role of Social Groups in the Persistence of Learned Fear,”
Science
309 (2005): 785–787; and Matthew D. Lieberman et al., “An fMRI Investigation of Race-Related Amygdala Activity in African-American and Caucasian-American Individuals,”
Nature Neuroscience
8, no. 6 (2005): 720–722.

19.
See Betsy Morris, “Arnold Power,”
Fortune
, August 9, 2004.

20.
See William Raft Kunst-Wilson and R. B. Zajonc, “Affective Discrimination of Stimuli That Cannot Be Recognized,”
Science
207 (1980): 557–558.

21.
See Gur Huberman, “Familiarity Breeds Investment,”
Review of Financial Studies
14, no. 3 (2001): 680.

22.
See Peter S. Dodd, Roby Muhamad, and Duncan J. Watts, “An Experimental Study of Search in Global Social Networks,”
Science
301 (2003): 827–829; and Duncan J. Watts,
Six Degrees: The Science of a Connected Age
(New York: W. W. Norton & Company, 2003).

23.
See Jon M. Kleinberg, “Navigation in a Small World,”
Nature
406 (2000): 845; and Duncan J. Watts and Steven H. Strogatz, “Collective Dynamics of ‘Small-World’ Networks,”
Nature
393 (1998): 440–442.

24.
See Linus Torvalds, “What Would You Like to See Most in Minix?” 1991,
http://groups.google.com/group/comp.os.minix/msg/b813d52cbc5a044b
.

25.
See Sarah F. Brosnan and Frans B. M. de Waal, “Monkeys Reject Unequal Pay,”
Nature
425 (2003): 297–299.

26.
See W. Guth, R. Schmittberger, and B. Schwarze, “An Experimental Analysis of Ultimatum Bargaining,”
Journal of Economic Behavior and Organization
3, no. 4 (1982): 367–388.

27.
See Alan G. Sanfey et al., “The Neural Basis of Economic Decision-Making in the Ultimatum Game,”
Science
300 (2003): 1755–1758.

28.
Chairman’s Letter to Berkshire Hathaway Shareholders, 2005, p. 7.

29.
See Ozgur Gurerk, Bernd Irlenbusch, and Bettina Rockenbach, “The Competitive Advantage of Sanctioning Institutions,”
Science
312 (2006): 108–111.

Seven: Private Spaceflight—A Case Study of Iconoclasts Working Together

1.
www.bigelowaerospace.com
(accessed December 2006).

2.
See David H. Freedman, “Entrepreneur of the Year,”
Inc
., January 2005.

3.
Ibid.

4.
See Michael A. Dornheim, “Flying in Space for Low Cost,”
Aviation, Week & Space Technology
, April 20, 2003.

5.
http://www.xprize.org/about/our-story
.

6.
Keynote address at the International Symposium for Personal Spaceflight (ISPS), Las Cruces, NM, October 18, 2006.

7.
See Mike Mullane,
Riding Rockets: The Outrageous Tales of a Space Shuttle Astronaut
(New York: Scribner, 2006), 35.

8.
See S. Suzette Beard and Janice Starzzyk,
Space Tourism Market Study: Orbital Space Travel and Destinations with Suborbital Space Travel
(Bethesda, MD: Futron Corporation, 2002).

9.
Futron updated its projections in 2006 to account for changes in technology and assumptions about potential passenger attributes.

10.
See Sam Dinkin, “Go Granny Go!”
Space Review
, 2005,
http://www.thespacere-view.com/article/429/1
.

11.
Unless otherwise noted, quotes in this section are from Reda Anderson, personal interview with author, October 16–20, 2006.

12.
Quotes in this section are from Ray Duffy, personal interview with author, October 16–20, 2006.

13.
ISPS, October 18, 2006.

Eight: When Iconoclast Becomes Icon

1.
See Patricia Sullivan, “Arthur Jones: Revolutionized Exercise Industry,”
Washington Post
, August 30, 2007.

2.
See J. Fisher and R. A. Hinde, “The Opening of Milk Bottles by Birds,”
British Birds
42 (1949): 347–357; and R. A. Hinde and J. Fisher, “Further Observations on the Opening of Milk Bottles by Birds,”
British Birds
44 (1951): 392–396.