44 pages • 1 hour read
Michael LewisA modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
The chapter’s title refers to the notion that people often make risky decisions without a context. The isolation effect theory was developed just as Danny and Amos were experiencing one of their most productive and prolific periods together, and after their ideas were starting to gain traction in the field of psychology as well as in economics. The more they studied the isolation effect, the more they became aware of new ideas, such as “framing,” in which “changing the description of a situation, and making a gain seem like a loss, you could cause people to completely flip their attitude toward risk, and turn them from risk avoiding to risk seeking” (276). From framing, they moved to prospect theory, which argued that when people are given two identical alternatives, they will likely select the one that is framed as a gain rather than a loss.
However, the chapter explores isolation beyond its effects on decision making. As Danny and Amos started to loosen their grip on their isolated collaboration, in which they worked behind a proverbial and literal closed door, Danny gave Amos an ultimatum. After Danny married fellow psychologist Anne Treisman, his second wife, he told Amos that he would be staying in the United States. If their collaboration were to continue, Amos would have to move from Israel back to the United States, which he decided to do. Amos’s wife, Barbara, had already adapted to Israeli culture, but Amos felt the need to see his collaboration with Danny through to whichever end it faced.
This chapter is built around two major focal points. The first is Danny and Amos’s extraordinary productivity working together as they sifted through complex ideas of others, like the Allais paradox, and as they developed their own, like the isolation effect, framing, and prospect theory. This remarkable productivity caught the attention of economists who sought to better understand the implications of utility theory, which sought to model worth or value in terms of economics. Richard Thaler, one of the world’s leading economists, recalls reading through Danny and Amos’s work in the following way: “I have vivid memories of running from one article to another. As if I have discovered the secret pot of gold. For a while I wasn’t sure why I was so excited. Then I realized: They had one idea. Which was systematic bias” (284). This was significant because “if people could be systematically wrong, their mistakes couldn’t be ignored” (284).
The other major focal point is Danny’s ultimatum to Amos. After Danny essentially forced Amos’s hand, and by extension changed Barbara’s life, their collaborative relationship was left hanging by a thread.
By Michael Lewis