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Cognitive Biases

Naive Darwinism

The mistaken belief that current success or dominance in a population is necessarily evidence of superior evolutionary fitness, ignoring the role of randomness, small sample sizes, and local optima. It is a specific manifestation of the survivorship bias and the law of small numbers applied to evolutionary thinking.

THE IDEA

The Firehouse Effect and the Convergence of Opinions

There are plenty of discussions in the psychology literature of such convergence of opinions, particularly in the area of mate selection or what Keynes calls "the beauty contest," where people tend to choose what other people choose, causing positive-feedback loops. An interesting manifestation is the autokinetic effect. When people gaze at a stationary light in a room they see it moving after a while and can estimate the amount of movement, not knowing that it is an optical illusion. When isolated the subjects give wildly varying speeds of movement; when tested in a group they converge to a common speed of movement: See Plotkin (1998). Sornette (2003) gives an accessible account of the feedback loops that result from herding, using intuitive mathematics.

Biology of Imitation

See Dugatkin (2001).

Evolution and Small Probabilities

Evolution is principally a probabilistic concept. Can it be fooled by randomness? Can the least skilled survive? There is a prevalent strain of Darwinism, called naive Darwinism, that believes that any species or member of a species that dominates at any point has been selected by evolution because they have an advantage over others. This results from a common misunderstanding of local and global optima, mixed with an inability to get rid of the belief in the law of small numbers (overinference from small data sets). Just put two people in a random environment, say a gambling casino, for a weekend. One of them will fare better than the other. To a naive observer the one who fares better will have a survival advantage over the other. If he is taller or has some trait that distinguishes him from the other, such trait will be identified by the naive observer as the explanation of the difference in fitness. Some people do it with traders—make them compete in a formal competition. Consider also the naive evolutionary thinking positing the "optimality" of selection—the founder of sociobiology does not agree with such optimality when it comes to rare events: E. O. Wilson (2002) writes: "The human brain evidently evolved to commit itself emotionally only to a small piece of geography, a limited band of kinsmen, and two or three generations into the future. To look neither far ahead nor far afield is elemental in a Darwinian sense. We are innately inclined to ignore any distant possibility not yet requiring examination. It is, people say, just good common sense. Why do they think in this shortsighted way? The reason is simple: It is a hardwired part of our Paleolithic heritage. For hundreds of millennia, those who worked for short-term gain within a small circle of relatives and friends lived longer and left more offspring—even when their collective striving caused their chiefdoms and empires to crumble around them. The long view that might have saved their distant descendants required a vision and extended altruism instinctively difficult to marshal."

See also Miller (2000): "Evolution has no foresight. It lacks the long-term vision of drug company management. A species can't raise venture capital to pay its bills while its research team... Each species has to stay biologically profitable every generation, or else it goes extinct. Species always have cashflow problems that prohibit speculative investments in their future. More to the point, every gene underlying every potential innovation has to yield higher evolutionary payoffs than competing genes, or it will disappear before the innovation evolves any further. This makes it hard to explain innovations."

When to use it

  • Evaluating investment managers and recognizing that past performance does not guarantee future results when the entire field is subject to randomness.

  • Examining whether agreement within a scientific community reflects shared evidence, social imitation, or a combination, rather than inferring the cause of agreement from consensus alone.

  • Analyzing hiring decisions or promotion processes where a small sample of successes is used to justify a specific selection criterion.

  • Assessing evolutionary arguments in popular science books that claim every trait is perfectly optimal and selected for directly.

FROM THEORY TO EVERYDAY LIFE

In practice

01

The Gambling Casino Weekend

Two people are placed in a random environment, a gambling casino, for a weekend. One fares better than the other. A naive observer concludes the winner has a survival advantage, potentially misidentifying an unrelated trait (e.g., height) as the cause of his success, failing to recognize the role of luck.

02

The Trader Competition

A trader competition ranks participants by the money they make during one period. Treating its winner as the most skilled ignores the possibility of luck and of a strategy being unusually well suited to that period. Longer records and evidence about risk-taking would help evaluate the result.

✳

A MOMENT TO REFLECT

Put it to work.

  1. Can you think of an industry (e.g., hedge funds, restaurants, startups) where the current 'winners' might just be the luckiest players in a random casino rather than the most fit?

  2. How does the autokinetic effect (convergence of opinions in a group) relate to the formation of fads, bubbles, and scientific consensus?

  3. In what areas of your life do you attribute success to skill instead of luck, potentially falling for naive Darwinism (e.g., in investing, career advancement, or personal relationships)?

Connected ideas

Another lens can bring the same problem into focus.

Often confused with

References

  1. Evolution in Mind: An Introduction to Evolutionary Psychology — Plotkin, Henry (1998)
  2. Why Stock Markets Crash: Critical Events in Complex Financial Systems — Sornette, Didier (2003)
  3. The Imitation Factor: Evolution Beyond the Gene — Dugatkin, Lee Alan (2001)
  4. The Future of Life — Wilson, E. O. (2002)
  5. The Mating Mind: How Sexual Choice Shaped the Evolution of Human Nature — Miller, Geoffrey (2000)

CONTINUE THE CONVERSATION

Source texts

  • Fooled by Randomness The Hidden Role of Chance in the Markets and in Life (Nassim Nicholas Taleb)
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