The Power of Star Trek STEPHEN BLAKEMORE

Are you Mr Spock or Dr McCoy?

Dr McCoy – The X-system

▪ Essentially the emotional approach to decision making. ▪ Automatic & effortless.▪ Generally based on similarity, familiarity & proximity (in

time).▪ Mental short cuts allow the X-system to deal with large

amounts of information simultaneously. ▪ Approximations rather than precision.▪ In order for the X-system to believe that something is

valid, it may simply need to wish that it were so.

Mr Spock – The C-system

▪ Logical way of processing information. ▪ Requires deliberate effort to engage this system. ▪ Deductive, logical approach to problem solving. ▪ Can only handle one step at a time. ▪ Evidence and logic will be required to make the C-

system believe that something is true.

So, are you Spock or McCoy?

1 - A bat and a ball together cost £1.10 in total. The bat costs a pound more than the ball. How much does the ball cost?

2 - If it takes five minutes for five machines to make five widgets, how long would it take 100 machines to make 100 widgets?3 - In a lake there is a patch of lily pads. Everyday the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long will it take to cover half of the lake?

1 - Answer

1. 1 Bat + 1 Ball = £1.10 & 1 Bat – 1 Ball = £12. 2 Bats = £2.103. 1 Bat = £1.054. 1 Ball = £0.05

2 - Answer

▪ It takes five machines five minutes to produce five widgets. ▪ Output is one widget per machine per five minutes. ▪ So it takes one hundred machines five minutes to

make 100 widgets.

3 - Answer

▪ If the patch doubles in size each day, the day before it must have covered half of the lake. ▪ The answer therefore is 47 days.

To surmise - What does this tell us?

▪ All humans are prone to decision making using the X-system.▪ Often unchecked by the more logical C-system. ▪ This makes investors prone to behavioural pits falls such as, 1. Loss aversion2. Conservatism 3. Impatience 4. Over- optimism 5. Overconfidence 6. Confirmatory bias

Live long and prosper…