“When confronted with threatening stimuli and predators, the crayfish responds with an innate escape machanism called the startle reflex. Also known as tailflipping, this stereotyped behaviour involves rapid flexions of the abdominal muscles which produce powerful swimming strokes that thrust the small crustacean through the water and away from danger. In the struggle for existence, the speed of this response can mean the difference between life and death, and the crayfish has evolved an incredibly fast escape mechanism which can be initiated within well under one-hundredth of a second. This mechanism depends on a process called coincidence detection, whereby the electrical impulses inputs from sensory organs on different parts of the body arrive simultaneously at a specific location in the central nervous system. Although this reflex has been studied intensively, the mechanism by which nervous impulses arrive in synchrony at the central nervous system was poorly understood.”



Fear the Roller Coaster? Embrace It
by Dennis K. Berman  /   September 11, 2007

In these markets, everyone’s afraid. It’s your response to the fear that matters most. Are you going to crack up like Howard Dean in 2004? Or detach yourself, analyze and respond like Neil Armstrong in 1969? Astronauts, firefighters and soldiers train to respond to moments of duress. The rest of us are left on our own. And in most cases, the results aren’t good. We generally underestimate the true dangers arrayed against us, overplaying the dramatically violent outcomes over the more insidious ones. And in times when we lack information, we’re prone to imagine the worst, scientists say. We are only as effective as our emotions allow us.

Which is precisely why this current market is so daunting. Consider the unknowns still in play: The choked market for short-term corporate funding. The impossible-to-value mounds of LBO debt and equity. The daisy-chain effect between liquidating hedge funds and the broader market. It’s a far different situation than the market drop of 2001, when the downturn was spurred by the relatively simple concept that technology stocks were broadly overvalued. What’s the best way to handle all of this lingering fear? Some inspiration comes from a group of researchers who have been applying new techniques to get an answer. The researchers have begun studying professional traders as if they were chimps, even using MRI machines to divine how fear affects the brain. “We are responding from a different part of the brain when we are in the midst of calm, clear thought,” says Brett Steenbarger, a psychiatry professor at the State University of New York’s Upstate Medical University, who also trains traders and hedge-fund managers.

That area is the prefrontal cortex, what he calls the “executive” node of the brain that plans and reasons. When we are fearful, blood flows away from the area toward the motor areas of the brain – the ones that produce a flight-or-fight sensation. This is great if you’re confronting a saber-toothed tiger, but not so great if you’re mulling your daughter’s college fund. “You end up making decisions rashly without engaging in research and planning that you might otherwise do,” he explains. Dr. Steenbarger has found that the most important step is to get back to basics: to methodically check whether the hypothesis that got you into an investment still applies or not. The next step of controlling market fear may be to eliminate as much borrowing as possible, he adds. Leverage, he says, magnifies financial results and therefore emotional swings. During times of high volatility, this can become an especially dangerous trap for bad decision making.

Andrew Lo, a professor at Massachusetts Institute of Technology, has observed professional traders in their natural habitats. He’s found that there is some truth to the idea of the Cool Hand Luke. Palms of veteran traders get less sweaty than novice ones. After especially stressful moments, these traders return to a standard physiological baseline. The novices “are all over the map,” Dr. Lo says. He recommends two other means of coping with financial fear. The first sounds simple but is essential – training yourself to recognize fear in the first place. For example, your habit may be to avoid the markets altogether by shunning the newspaper or online stock quotes. The second approach is to prepare for a busted or volatile market,
much like an astronaut rehearsing emergency procedures. This helps neutralize the fear in your decision making, especially in those moments when it seems so easy to succumb.

That’s why it might make sense to decide ahead of time your range of responses if your portfolio loses, say, 10 percent to 20 percent of its value. Research has shown that, unsurprisingly, retail investors are usually the worst at this, adds Dr. Lo. Neil Armstrong’s cool is on vivid display in the wonderful new movie, “In the Shadow of the
Moon,” about the Apollo lunar missions. In one fraught moment, Mr. Armstrong is running low on fuel as he pilots the spacecraft to the moon’s surface. The cameras pan to the smoking, sweating wonks in Mission Control. Piped in by radio, Mr. Armstrong’s voice sounds unshaken, almost blase. His best human trait – his intellect – has subdued his most animal one – his fear. That’s been the experience of 67-year-old Lewis van Amerongen, formerly of private-equity firm Gibbons, Green, Goodwin & van Amerongen. Having pioneered the buyout business, the firm got bogged down in the now-infamous “Burning Bed” purchase of Ohio Mattress Co. in the late 1980s. When the junk-bond market collapsed soon afterward, bank First Boston couldn’t refinance
a $457 million bridge loan and ended up owning most of the company. “Each generation has to go through it and has to emotionally experience it,” Mr. van Amerongen said in an interview. “Without that, it’s just an academic exercise.” In other words, there is no substitute for having survived other fearful experiences. The best
antidote for fear just may be fear itself.


Brett Steenbarger
email : steenbab [at] aol [dot] com

Andrew Lo
email : ssalem [at] mit [dot] edu

Darwinian Investing – Dr. Andrew Lo’s market theory borrows from
neuroscience, evolution, and econometrics
by Christopher Farrell  /  February 20, 2006
“Can brain science unlock the secrets of success on Wall Street? And if so, will it transform the field of personal finance? These matters fascinate Andrew W. Lo, a finance professor at Massachusetts Institute of Technology’s Sloan School of Management and director of its Laboratory for Financial Engineering. Lo, 45, and a small band of economists are tapping into neuroscience and cognitive psychology to
better understand how investors make financial decisions. In one early experiment, he and a colleague wired up 10 traders in Boston and monitored their breathing, body temperature, perspiration, pulse rates, and muscle activity as they risked real money in the markets. While the most seasoned traders in the group remained relatively calm,
nearly everyone had sweaty palms and quickened pulses when the markets grew more volatile. “Even the best traders have significant emotional responses when they trade,” says Lo. This fights the stereotype of traders as rational, coolly analytical Vulcans of commerce. Lo’s results, along with further studies using more sophisticated magnetic-
resonance imaging on traders, also undercut a dominant theory known as the efficient market hypothesis (EMH), which holds that markets aggregate information efficiently and investors form their financial expectations rationally. The reality may be much messier. Lo, who also serves as chief scientific officer at the hedge fund Alphasimplex, breaks with both EMH and behavioral economics in seeing emotions as
central to survival in the market. But this is just one element in a theory Lo is developing called the Adaptive Market Hypothesis. It shows how investors use trial and error to establish rules of thumb when placing financial bets and then hone their skills amid disruptive changes. Think of the market as an ecosystem made up of hedge funds, mutual funds, retail investors, and other “species,” all competing for
profit opportunities. It’s a Darwinian world where market shifts render some strategies obsolete, resulting in chances missed and money lost, says Lo. “The only way to maintain an edge is to continually innovate.”

Lo is not the first to incorporate the insights of Charles Darwin in his models. Luminaries from Joseph Schumpeter to Gary Becker explored this territory in the past. But Lo’s mingling of neuroscience, evolution, and financial econometrics is highly original. He predicts that the insights of evolutionary psychology will change individual
wealth- and risk-management techniques, right down to how people handle 401(k) portfolios or deal with declining home prices. Prepped with appropriate data from Lo’s research, a simple computer program might one day provide invaluable financial advice. You would punch in basic information, such as family status, life goals, the standard of living you would find acceptable in retirement, and the types of risks
you can or can’t tolerate. An algorithm would then tailor a portfolio for you and help you hedge against unwanted risks, such as a lost job or a wage cut. “Now, it sounds like science fiction,” says Lo. “Not in 10 years.” Sci-fi was an important influence on Lo, whose family moved from Taiwan to Queens, N.Y., when he was 5. Raised by his mother, he became an academic star. He skipped eighth grade, sped through Bronx
High School of Science and Yale University, and nabbed a PhD in economics from Harvard University at age 24. But it was Isaac Asimov’s Foundation trilogy that steered him toward finance economics. Asimov sketched out a branch of mathematics called psychohistory, whose practitioners sample the proclivities of large numbers of people, then accurately predict the future based on what they learn. Sound familiar?”

Visualizing Market Fear
by Richard L. Peterson  /  September 26, 2007

“How can you cope with market fear? Many investors consider this a crucial question. Yet it often isn’t until periods of fear and sharp market downturns that investors think, “now I know I shouldn’t sell everything, but it really hurts!” It’s at these times that the
excellent investors and traders stand out. They can muster the courage to buy in such markets, even as the financial news and media pundits are screaming, “The sky is falling!” The MarketPsych Fear Index was displayed on the Wall Street Journal’s C1 Money and Investing page a couple weeks ago. The MarketPsych Fear Index helps investors visualize the fear they are feeling that is affecting their judgment. Studies
show that we’re all affected by market fear, and it takes a lot of courage and experience to step back and see the fear and identify the opportunities that it creates. The first step is understanding that fear is contagious. The second step is identifying where it is and how strong it is. That’s what our Index allows.”


On Wall Street, Eyes Turn to the Fear Index
by Michael M. Grynbaum  /  October 20, 2008

Fear is running high on Wall Street. Just look at the Fear Index. With all those stomach-churning free falls and sharp reversals in the stock market recently, traders are keeping a nervous eye on an obscure index known as the VIX. The VIX (officially the Chicago Board Options Exchange Volatility Index) measures volatility, the technical term for those wrenching market swings. A rising VIX is usually regarded as a sign that fear, rather than greed, is ruling the market. The higher the VIX goes, the more unhinged the market looks. So how scared are investors? On Friday, the VIX rose to 70.33, its highest close since its introduction in 1993. To some experts, that suggests that the wild ride is far from over. “Right now, it’s an extremely important part of the puzzle,” Steve Sachs, a trader at Rydex Investments, said of the VIX. “It’s showing a huge amount of fear in the marketplace.”

The VIX is hardly a household name like the Dow. But lately, it has become a fixture on CNBC and other financial news outlets, with commentators often invoking an index that most of the general public was blissfully unaware of only a few weeks ago. Some traders think all the publicity has only added to the anxieties that the VIX is intended
to reflect. “The VIX is a self-fulfilling prophecy,” said Ryan Larson, head equity trader at Voyageur Asset Management. “It’s almost adding to the problems.” Speaking on Thursday, when the VIX hit an intraday high of 81.17 before closing lower, he said: “You see the VIX trade north of 80, and of course the media starts to pick it up.” Mr. Larson continued, “It’s blasted on the TV, and for the average investor sitting at home, they think, oh, my gosh, the VIX just broke 80 — I’ve got to go sell my stocks.”

Put simply, the VIX measures the degree to which investors think stocks will swing violently in the next 30 days. It is calculated in real time throughout the trading day, fluctuating minute to minute. The higher the VIX, the bigger the expected swings — and the index has a good track record. It spiked in 1998 when a big hedge fund, Long-
Term Capital Management, collapsed, and after the 9/11 terrorist attacks. Mr. Sachs, with some incredulity, said that the swings in the stock market have reflected the volatility implied by the VIX. “We had a 17 percent peak-to-trough trading range this week,” he said. “It should take two years under normal circumstances for the S.& P. 500 to have that type of trading range.”

The VIX had its origin in 1993, when the Chicago Board Options Exchange approached Robert E. Whaley, then a professor at Duke, with a dual proposal. “The first purpose was the one that is being served right now — find a barometer of market anxiety or investor fear,” Professor Whaley, who now teaches at the Owen Graduate School of
Management at Vanderbilt University, recalled in an interview. But, he said, the board also wanted to create an index that investors could bet on using futures and options, providing a new revenue stream for the exchange. Professor Whaley spent a sabbatical in France toying with formulas. He returned to the United States with the VIX, which gauges anxiety by calculating the premiums paid in a specific options market run by the Chicago Board Options Exchange.

An option is a contract that permits an investor to buy or sell a security at a certain date at a certain price. These contracts often amount to insurance policies in case big moves in the market cause trouble in a portfolio. A contract, like insurance, costs money — specifically, a premium, whose price can fluctuate. The VIX, in its current form, measures premiums paid by investors who buy options tied to the price of the Standard & Poor’s 500-stock index. In times of confusion or anxiety on Wall Street, investors are more eager to buy this insurance, and thus agree to pay higher premiums to get them. This pushes up the level of the VIX. “It’s analogous to buying fire insurance,” Professor Whaley said. “If there’s some reason to believe there’s an arsonist in your neighborhood, you’re going to be willing to pay more for insurance.”

The index is not an arbitrary number: it offers guidance for the expected percentage change of the S.& P. 500. Based on a formula, Friday’s close of around 70 suggests that investors think the S. & P. 500 could move up or down about 20 percent in the next 30 days — an almost unheard-of swing. So the higher the number, the bigger the
swing investors think the market will take. Put another way, the higher the VIX, the less investors know about where the stock market is headed. The current level shows that “investors are still very uncertain about where things will go,” said Meg Browne of Brown Brothers Harriman, a currency strategist who was keeping a close eye on the VIX as the stock market soared last Monday.

Since 2004, investors have been able to buy futures contracts on the VIX itself, providing a way to hedge against volatility in the market. Options on the VIX have been available since 2006. “You have seen more and more investors using it as an avenue toward hedging their portfolios,” said Chris Jacobson, chief options strategist at the Susquehanna Financial Group. In times of crisis, “while you’re losing your portfolio, you could make some money on the increase in volatility,” he said. Some investors are skeptical about the utility of the index. “If you’re trading the markets, you pretty much know the fear, you know the volatility. I don’t need an index to tell me there’s volatility out there,” Mr. Larson said.

Robert E. Whaley
email : whaley [at] vanderbilt [dot] edu



What caused the meltdown on Wall Street? Greed. Lax regulation. Panic. And maybe the very biological makeup of investors’ brains. Eight years ago a handful of brain scientists began using MRI scanners, psychological tests and an emerging understanding of brain anatomy to try and overturn traditional economic theories that assume people always act rationally when it comes to financial decisions. To understand the market, these researchers said, you needed to get inside peoples’ heads. They called their new field neuroeconomics.

If proof was needed that markets can be unpredictable, irrational and cruel, the past few weeks provided it. Bear Stearns and Merrill Lynch have been swallowed up by emergency mergers. The government has bailed out Fannie Mae, Freddie Mac and AIG. Lehman Brothers is bankrupt.  So, can these neuroeconomists shed any light on what went wrong? Surprisingly, yes. “Fear plus herding equals panic,” says Gregory
Berns, a neuroeconomist at Emory University. “You bet it’s biologically based.”

At the core of the market mess are securities that were backed by extremely risky mortgages. The theory was that slicing and dicing mortgages diluted the risk away. But the ratings agencies were being compensated by issuers of the mortgage-backed securities, and neuroeconomics says that created big problems. “You don’t get mistakes this big based on stupidity alone,” says George Loewenstein of Carnegie Mellon University. “It’s when you combine stupidity and people’s incentives that you get errors of this magnitude.”

Consider this forthcoming research by Loewenstein, Roberto Weber and John Hamman, all of Carnegie Mellon. They organized volunteers into partners. One partner is given $10 and told to split it however he sees fit. On average, the deciding partner keeps $8 and gives away $2. Then researchers repeat the game. This time, the decider pays an “analyst” to decide how to split the money fairly. The game continues
for multiple rounds and the decider can fire the analyst. With this change, the decider gets everything. Paying somebody else to ensure assets are divided fairly actually makes things less fair.

Colin Camerer, an economist at Caltech, blames “diffusion of responsibility” for the problems. His own research identifies another problem: Neither investors nor bankers were likely to be considering worst-case scenarios. Camerer conducted experiments in which two people engage in a negotiating game on how to split $5. But each time
they fail to come to an agreement, the value of the pot drops. The negotiators can check the total value of the money by clicking colored boxes on a computer screen. But only 10% look to see what will happen in the worst case.

To make matters worse, hedge funds were bragging about uncanny returns, making the impossible seem possible. But some studies show that these results may have been inflated by a lack of disclosure, Camerer says. Brain imaging studies show that investors as a whole get more and more used to big returns, and thus take bigger and bigger risks in a bull market–and then the bubble pops and stockholders start selling like mad.

One reason: Investors fear losing more than they look forward to winning. According to a 2007 paper, researchers used MRI scans to watch the brains of people as they decided whether or not to take gambles with a 50/50 risk. Gains caused brains to light up in areas that released dopamine (the chemical boosted by Zoloft and Prozac); losses caused those same areas to decrease. Researchers could predict that people would do based on the size of the increases.

Dread, the anticipation of a loss that is expected to happen, is another powerful force. Emory’s Berns has shown that people differ in how they respond to expected pain. He gave electric shocks to people in an MRI machine, and then gave them the option of either getting an intense shock immediately or a less intense shock later. People whose brains started lighting up in areas associated with pain beforehand were more likely to decide to get the pain over with. They also would have sold stock.

So what’s a regulator to do? One argument against big bailouts is moral hazard–the idea that if you bail the banks out now, future bankers will take even bigger risks. Caltech’s Camerer points out that people are naturally shortsighted. People with health insurance do spend more on care, he says, but people who rent cars don’t get in
more accidents, because there are more immediate risks, like bodily harm. But so far the government’s attempts to quell the risk have just reinforced the idea that something is very wrong. If you tell somebody not to think about white elephants, Loewenstein notes, they will do exactly that.

On the other hand, putting a floor in the market for these mortgage-backed securities, as the government’s plan tried to do, could ease investor panic, says Richard Peterson of MarketPsy Capital, who is trying to put neuroeconomic research to work in a $50 million hedge fund. “Things are unknowable,” Peterson says. “That is the X factor
that is causing the risk aversion to accelerate.”

George Loewenstein
email : gL20 [at] andrew.cmu [dot] edu

Colin Camerer
email : camerer [at] hss.caltech [dot] edu


The Chemical Basis of Trust
Trust is essential to healthy social interactions, but how do we decide whether we can trust strangers? An article based on research supported by the Templeton Foundation and published in the June issue of Scientific American argues that the hormone ocytocin enhances our ability to trust strangers who exhibit non-threatening signals.

The article, “The Neurobiology of Trust,” by Paul J. Zak, is based on original research with an experimental situation that the author calls the “trust game.” It is a modification of a similar game developed in the mid-1990s by the experimental economists Joyce Berg, John Dickhaut, and Kevin McCabe. The game allows test subjects to transfer their money to a stranger if they trust the stranger to reciprocate by transferring more back.

When we are trusted, Zak found, our brains release oxytocin, which makes us more trustworthy; the subjects with the highest levels of oxytocin returned the most money to their partners. Moreover, the rise in oxytocin levels, and not the absolute level, made the difference. Zak also found that subjects who inhaled an oxytocin nasal spray were more likely to trust others. Those given oxytocin transferred 17 percent more money than control subjects who inhaled a placebo. Twice as many subjects who received oxytocin gave all their cash to their partners.

Ocytocin is best known as the hormone that induces labor in pregnant women. But Zak maintains that its role in the development of trust has implications for a range of important issues, from the growth of wealth in developing countries to the nature of diseases such as autism to the physiological basis of virtuous behaviors. A professor
of economics and founding director of the Center for Neuroeconomics Studies at Claremont Graduate University, Zak also serves as clinical professor of neurology at Loma Linda University Medical Center. His new book, Moral Markets: The Critical Role of Values in the Economy, was also supported by JTF, and was published by Princeton University Press this year.


Paul J. Zak
email : paul [at] pauljzak [dot] com

‘Might have been’ key in evaluating behavior
by Ruth SoRelle  /  August 2007

“What might have been,” or fictive learning, affects the brain and plays an important role in the choices individuals make – and may play a role in addiction, said Baylor College of Medicine researchers and others in a report that appeared in the Proceedings of the National Academy of Sciences. These “fictive learning” experiences, governed by what might have happened under different circumstances, “often dominate the evaluation of the choices we make now and will make in
the future,” said P. Read Montague Jr., Ph.D., professor of neuroscience at BCM and director of the BCM Human Neuroimaging Laboratory and the newly formed Computational Psychiatry Unit. “These fictive signals are essential in a person’s ability to assess the quality of his or her actions above and beyond simple experiences that
have occurred in the immediately proximal time.”

Blood flow reflects brain’s response to risk and reward
Using techniques honed in previous experiments that studied trust, Montague and his colleagues used an investment game to test the effects of these “what if” thoughts on decisions in 54 subjects. Using functional magnetic resonance imaging (fMRI) to measure blood flow changes in specific areas of the brain, they precisely measured
responses to economic instincts. These blood flow changes in the brain reflect alterations in the activity of nerve cells in the vicinity. In this case, they measured the brain’s response to “what could have been acquired” and “what was acquired.” This newly discovered “fictive learning” signal was measured, localized and precisely parsed from the brain’s standard reward signal that reflects actual experience. Each
subject took part in a sequential gambling task. The player makes a new investment allocation (a bet) and then receives a “snippet” of information about the market – either the market went up and the investment was a good one or the market goes down and the play had a loss. Each subject received $100 and played 10 markets, making 20 decisions about each.

Regret affects future decisions
Montague and his associates found that fictive learning – the “what might have happened” – affected the brains of the subjects and played an important role in their decisions about the game. This effect manifested as a distinct selective activation signal in a part of the brain called the ventral caudate nucleus. The emotion of regret for a path chosen or not taken can be strongly influential on future decision-making. The fictive learning signal discovered by Montague and the team of researchers does not necessarily manifest as such a conscious “feeling” but contributes to the brain’s computation and planning operations in a robust way that is now available to rigorous
experimental analysis in health and in diseases of the brain/mind. “We used real world market data – the crash of 1929, the bubble of the late 1990s and so on – to probe each subject’s brain response to fictive signals (what could have been) as they navigated their choices. This means we now have a kind of neural catalogue of how
famous stock market episodes affect signals in the average human brain,” said Montague. He plans to use the findings from this study to explore the balance of choices between actual and fictive outcomes.

New tool for studying addiction
“These results provide a new tool for exploring issues related to addiction,” Montague said. “For example, why does a person choose using a drug even though he or she can imagine the bad consequences that can result? We now have a way to measure quantitatively the balance between reward-seeking (like seeking a drug) and the thoughts that could intervene.”

“The brain has a well-defined system for pursuing actual rewards based on actual outcomes,” said Terry Lohrenz, Ph.D., instructor in the neuroimaging laboratory and the report’s first author. “The system is complex, but recent research has begun to dissect them in great detail. The importance of that work is that the reward guidance
signals are exactly those hijacked by drugs of abuse. “Identifying real neural signals to fictive outcomes now positions us to understand how our more abstract thoughts – the way we contextualize or frame our experience – guide our behavior,” Lohrenz added.

P. Read Montague
email : readm [at] bcm.tmc [dot] edu

Terry Lohrenz
email : tlohrenz [at] hnl.bcm.tmc [dot] edu

Has evolution essentially bootstrapped our penchant for intellectual concepts to the same kinds of laws that govern systems such as financial markets?
by Jonah Lehrer  /  August 8, 2008

Read Montague is getting frustrated. He’s trying to show me his newest brain scanner, a gleaming white fMRI machine that looks like a gargantuan tanning bed. The door, however, can be unlocked only by a fingerprint scan, which isn’t recognizing Montague’s fingers. Again and again, he inserts his palm under the infrared light, only to get the same beep of rejection. Montague is clearly growing frustrated — “I can’t get into my own scanning room!” he yells, at no one in particular — but he also appreciates the irony. A pioneer of brain imaging, he oversees one of the premier fMRI setups in the world, and yet he can’t even scan his own hand. “I can image the mind,” he says. “But apparently my thumb is beyond the limits of science.”

Montague is director of the Human Neuroimaging Lab at Baylor College of Medicine in downtown Houston. His lab recently moved into a sprawling, purpose-built space, complete with plush carpets, fancy ergonomic chairs, matte earth-toned paint and rows of oversize computer monitors. (There are still some technical kinks being worked
out, hence the issue with the hand scanner.) If it weren’t for the framed sagittal brain images, the place could pass for a well-funded Silicon Valley startup. The centerpiece of the lab, however, isn’t visible. Montague has access to five state-of-the-art fMRI machines, which occupy the perimeter of the room. Each of the scanners is hidden
behind a thick concrete wall, but when the scanners are in use — and they almost always are — the entire lab seems to quiver with a high-pitched buzz. Montague, though, doesn’t seem to mind. “It’s not the prettiest sound,” he admits. “But it’s the sound of data.”

Montague, who is uncommonly handsome, with a strong jaw and a Hollywood grin, first got interested in the brain while working in the neuroscience lab of Nobel Laureate Gerald Edelman as a post-doc. “I was never your standard neuroscientist,” he says. “I spent a lot of time thinking about how the brain should work, if I had designed it.” For Montague the cortex was a perfect system to model, since its incomprehensible complexity meant that it depended on some deep, underlying order. “You can’t have all these cells interacting with each other unless there’s some logic to the interaction,” he says. “It just looked like noise, though — no one could crack the code.” That’s
what Montague wanted to do. The human brain, however, is an incredibly well-encrypted machine. For starters it’s hard to even know what the code is: Our cells express themselves in so many different ways. There’s the language of chemistry, with brain activity measured in squirts of neurotransmitter and kinase enzymes. And then there’s the electrical conversation of the cortex, so that each neuron acts like a
biological transistor, emitting a binary code of action potentials. Even a silent cell is conveying some sort of information — the absence of activity is itself a form of activity.

Montague realized that if he was going to solve the ciphers of the mind, he would need a cryptographic key, a “cheat sheet” that showed him a small part of the overall solution. Only then would he be able to connect the chemistry to the electricity, or understand how the signals of neurons represented the world, or how some spasm of cells caused human nature. “There are so many different ways to describe
what the brain does,” Montague says. “You can talk about what particular cell is doing, or look at brain regions with fMRI, or observe behavior. But how do these things connect? Because you know they are connected; you just don’t know how.” That’s when Montague discovered the powers of dopamine, a neurotransmitter in the brain.
His research on the singular chemical has drawn tantalizing connections between the peculiar habits of our neurons and the peculiar habits of real people, so that the various levels of psychological description — the macro and the micro, the behavioral
and the cellular — no longer seem so distinct. What began as an investigation into a single neurotransmitter has morphed into an exploration of the social brain: Montague has pioneered research that allows him to link the obscure details of the cortex to all sorts of important phenomena, from stock market bubbles to cigarette addiction
to the development of trust. “We are profoundly social animals,” he says. “You can’t really understand the brain until you understand how these social behaviors happen, or what happens when they go haywire.”

And yet even as Montague attempts to answer these incredibly complex questions, his work remains rooted in the molecular details of dopamine. No matter what he’s talking about — and he likes to opine on everything from romantic love to the neural correlates of the Coca-Cola logo — his sentences are sprinkled with the jargon of a neural cryptographer. The brain remains a black box, an encrypted mystery, but the transactions of dopamine are proving to be the Rosetta Stone, the missing link that just might allow the code to be broken. The importance of dopamine was discovered by accident. In 1954 James Olds and Peter Milner, two neuroscientists at McGill University, decided to implant an electrode deep into the center of a rat’s brain. The
precise placement of the electrode was largely happenstance: At the time the geography of the mind remained a mystery. But Olds and Milner got lucky. They inserted the needle right next to the nucleus accumbens (NAcc), a part of the brain dense with dopamine neurons and involved with the processing of pleasurable rewards, like food and sex.

Olds and Milner quickly discovered that too much pleasure can be fatal. After they ran a small current into the wire, so that the NAcc was continually excited, the scientists noticed that the rodents lost interest in everything else. They stopped eating and drinking. All courtship behavior ceased. The rats would just cower in the corner of
their cage, transfixed by their bliss. Within days all of the animals had perished. They had died of thirst. It took several decades of painstaking research, but neuroscientists eventually discovered that the rats were suffering from an excess of dopamine. The stimulation of the brain triggered a massive release of the neurotransmitter, which
overwhelmed the rodents with ecstasy. In humans addictive drugs work the same way: A crack addict who has just gotten a fix is no different from a rat in electrical rapture. This, then, became the dopaminergic cliché — it was the chemical explanation for sex, drugs, and rock ‘n’ roll. But that view of the neurotransmitter was vastly oversimplified. What wasn’t yet clear was that dopamine is also a profoundly important
source of information. It doesn’t merely let us take pleasure in the world; it allows us to understand the world.

The first experimental insight into this aspect of the dopamine system came from the pioneering research of Wolfram Schultz, a neuroscientist at Cambridge University. He was originally interested in the neurotransmitter because of its role in triggering Parkinson’s disease, which occurs when dopamine neurons begin to die in a part of
the brain that controls bodily movements. Schultz recorded from cells in the monkey brain, hoping to find those cells involved in the production of movement. He couldn’t find anything. “It was a classic case of experimental failure,” he says. But after years of searching in vain, Schultz started to notice something odd about these dopamine
neurons: They began to fire just before the monkeys got a reward. (Originally, the reward was a way of getting the monkeys to move.) “At first I thought it was unlikely that an individual cell could represent anything so complicated,” Schultz says. “It just seemed like too much information for one neuron.” After hundreds of experimental
trials, Schultz began to believe his own data: He realized that he had found, by accident, the reward mechanism at work in the primate brain. “Only in retrospect can I appreciate just how lucky we were,” he says. After publishing a series of landmark papers in the mid-1980s, Schultz set out to decipher this reward circuitry in exquisite detail. How, exactly, did these single cells manage to represent a reward? His experiments observed a simple protocol: He played a loud tone, waited for a few seconds, and then squirted a few drops of apple juice into the mouth of a monkey. While the experiment was unfolding, Schultz was probing the dopamine-rich areas of the monkey brain with a needle that monitored the electrical activity inside individual cells. At first the dopamine neurons didn’t fire until the juice was delivered; they
were responding to the actual reward. However, once the animal learned that the tone preceded the arrival of juice — this requires only a few trials — the same neurons began firing at the sound of the tone instead of the sweet reward. And then eventually, if the tone kept on predicting the juice, the cells went silent. They stopped firing altogether.

When Schultz began publishing his data, nobody quite knew what to make of these strange neurons. “It was very, very tough to figure out what these cells were encoding,” Schultz says. He knew that the cells were learning something about the juice and the tone, but he couldn’t figure out how they were learning it. The code remained impenetrable. At the time Montague was a young scientist at the Salk Institute, working in the neurobiology lab of Terry Sejnowski. His approach to
the brain was rooted in the abstract theories of computer science, which he hoped would shed light on the software used by the brain. Peter Dayan, a colleague of Montague’s at Salk, had introduced him to a model called temporal difference reinforcement learning (TDRL). Computer scientists Rich Sutton and Andrew Barto, who both worked on models of artificial intelligence, had pioneered the model. Sutton and Barto wanted to develop a “neuronlike” program that could learn simple rules and behaviors in order to achieve a goal. The basic premise is straightforward: The software makes predictions about what will happen — about how a checkers game will unfold for example — and then compares these predictions with what actually happens. If the prediction is right, that series of predictions gets reinforced. However, if the prediction is wrong, the software reevaluates its representation of the game.

Montague was entranced by these software prototypes. “It was just so clearly the most efficient way to learn,” he says. The problem was that TDRL remained purely theoretical, a system both elegant and imaginary. Even though computer scientists had begun to adapt the programming strategy for various practical purposes, such as running a bank of elevators or determining flight schedules, no one had found a
neurological system that worked like this. But one spring day in 1991, Dayan burst into Montague’s small office. “He was very excited and shoved these figures from some new paper in my face,” Montague remembers. “He kept on saying to me, ‘What does this look like? What does this look like?'” The figures were from Schultz’s experiments
with dopamine neurons, and they showed how these cells reacted to the tone and the juice. “I thought he had faked the data,” Montague says. “Dayan was a big prankster, and I assumed he’d photocopied some of our own figures [on TDRL] just to tease me. It looked too good to be true.” Montague immediately realized that he and Dayan could make sense of Schultz’s mysterious neurons. They knew what these dopamine cells were doing; they had seen this code before. “The only reason we could see it so clearly,” Montague says, “is because we came at it from this theoretical angle. If you were an experimentalist seeing this data, it would have been extremely confusing. What the hell are these cells doing? Why aren’t they just responding to the juice?” That
same day Montague and Dayan began writing a technical paper that laid out their insight, explaining how these neurons were making precise predictions about future rewards. But the paper — an awkward mix of Schultz’s dopamine recordings and equations borrowed from computer science — went nowhere. “We wrote that paper 11 times,” Montague says. “It got bounced from every journal. I came this close to leaving the field. I realized that neuroscience just wasn’t ready for theory, even
if the theory made sense.”

Nevertheless, Montague and Dayan didn’t give up. They published their ideas in obscure journals, like Advances in Neural Information Processing Systems. When the big journals rejected their interpretation of monkey neurons, they instead looked at the nervous systems of honeybees, which relied on a version of TDRL when foraging
for nectar. (That paper got published in Nature in 1995.) “We had to drag the experimentalists kicking and screaming,” Montague says. “They just didn’t understand how these funny-looking equations could explain their data. They told us, ‘We need more data.’ But what’s the point of data if you can’t figure it out?” The crucial feature of these dopamine neurons, say Montague and Dayan, is that they are more concerned with predicting rewards than with the rewards themselves. Once the cells memorize the simple pattern — a loud tone predicts the arrival of juice — they become exquisitely sensitive to variations on the pattern. If the cellular predictions proved correct and the primates experienced a surge of dopamine, the prediction was reinforced. However, if the pattern was violated — if the tone sounded but the juice never arrived — then the monkey’s dopamine neurons abruptly decreased their firing rate. This is known as the “prediction error signal.” The monkey got upset because its predictions of juice were wrong. What’s interesting about this system is that it’s all
about expectation. Dopamine neurons constantly generate patterns based upon experience: If this, then that. The cacophony of reality is distilled into models of correlation. And if these predictions ever prove incorrect, then the neurons immediately readjust their expectations. The discrepancy is internalized; the anomaly is remembered. “The accuracy comes from the mismatch,” Montague says. “You learn how the world works by focusing on the prediction errors, on the events that you didn’t expect.” Our knowledge, in other words, emerges from our cellular mistakes. The brain learns how to be right by focusing on what it got wrong.

Despite his frustration  with the field, Montague continued to work on dopamine. In 1997 he published a Science paper with Dayan and Schultz whose short title was audaciously grand: “A Neural Substrate of Prediction and Reward.” The paper has since been cited more than 1,200 times, and it remains the definitive explanation of how the brain parses reality into a set of accurate expectations, which are measured
out in short bursts of dopamine. A crucial part of the cellular code had been cracked. But Montague was getting restless. “I wanted to start asking bigger questions,” he says. “Here’s this elegant learning system, but how does it fit with the rest of the brain? And can we take this beyond apple juice?” At first glance the dopamine system
might seem largely irrelevant to the study of human behavior. Haven’t we evolved beyond the brutish state of “reward harvesting,” where all we care about is food and sex? Dopamine might explain the simple psychology of a lizard, or even a monkey sipping juice, but it seems a stretch for it to explain the Promethean mind of a human. “One of the distinguishing traits of human beings is that we chase ideas, not just
primary rewards,” Montague says. “What other animal goes on hunger strike? Or abstains from sex? Or blows itself up in a cafe in the name of God?” These unique aspects of human cognition seem impossible to explain with neurons that track and predict rewards. After all, these behaviors involve the rejection of rewards: We are shrugging off tempting treats because of some abstract belief or goal.

Montague’s insight, however, was that ideas are just like apple juice. From the perspective of the brain, an abstraction can be just as rewarding as the tone that predicts the reward. Evolution essentially bootstrapped our penchant for intellectual concepts to the same reward circuits that govern our animal appetites. “The guy who’s on hunger strike for some political cause is still relying on his midbrain dopamine neurons, just like a monkey getting a treat,” Montague says. “His brain simply values the cause more than it values dinner.” According to Montague, the reason abstract thoughts can be so rewarding, is that the brain relies on a common neural currency for
evaluating alternatives. “It’s clear that you need some way to compare your options, even if your options come from very different categories,” he says. By representing everything in terms of neuron firing rates, the human brain is able to choose the abstract thought over the visceral reward, as long as the abstraction excites our cells
more than apple juice. That’s what makes ideas so powerful: No matter how esoteric or ethereal they get, they are ultimately fed back into the same system that makes us want sex and sugar. As Montague notes, “You don’t have to dig very far before it all comes back to your loins.”

In recent years Montague has shown how this basic computational mechanism is a fundamental feature of the human mind. Consider a paper on the neural foundations of trust, recently published in Science. The experiment was born out of Montague’s frustration with the limitations  of conventional fMRI. “The most unrealistic element [of fMRI experiments] is that we could only study the brain by itself,” Montague says. “But when are brains ever by themselves?” And so Montague pioneered a technique known as hyper-scanning, allowing subjects in different fMRI machines to interact in real time. His experiment revolved around a simple economic game in which getting the maximum reward required the strangers to trust one another. However, if one of the players grew especially selfish, he or she could always steal from the pot and erase the tenuous bond of trust. By monitoring the players’ brains, Montague was able to predict whether or not someone would steal money several seconds before the theft actually occurred. The secret was a cortical area known as the caudate nucleus,
which closely tracked the payouts from the other player. Montague noticed that whenever the caudate exhibited reduced activity, trust tended to break down.

But what exactly is the caudate computing? How do we decide whom to trust with our money? And why do we sometimes decide to stop trusting those people? It turned out that the caudate worked just like the reward cells in the monkey brain. At first the caudate didn’t get excited until the subjects actually trusted one another and garnered
their separate rewards. But over time this brain area started to expect trust, so that it fired long before the reward actually arrived. Of course, if the bond was broken — if someone cheated and stole money — then the neurons stopped firing; social assumptions were proven wrong. (Montague is currently repeating this experiment with a collaborating lab in China so that he can detect the influence of culture on social interactions.) The point, he says, is that people were using this TDRL strategy — a strategy that evolved to help animals find caloric rewards — to model another mind. Instead of predicting the arrival of juice, the neurons were predicting the behavior of someone else’s brain.

A few years ago, Montague was reviewing some old papers on TDRL theory when he realized that the system, while effective and efficient, was missing something important. Although dopamine neurons excelled at measuring the mismatch between their predictions of rewards and those that actually arrived — these errors provided the input for learning — they’d learn much quicker if they could also incorporate the
prediction errors of others. Montague called this a “fictive error learning signal,” since the brain would be benefiting from hypothetical scenarios: “You’d be updating your expectations based not just on what happened, but on what might have happened if you’d done something differently.” As Montague saw it, this would be a very valuable addition to our cognitive software. “I just assumed that evolution would use this approach, because it’s too good an idea not to use,” he says.

The question, of course, is how to find this “what if” signal in the brain. Montague’s clever solution was to use the stock market. After all, Wall Street investors are constantly comparing their actual returns against the returns that might have been, if only they’d sold their shares before the crash or bought Google stock when the company first went public. The experiment went like this: Each subject was
given $100 and some basic information about the “current” state of the stock market. After choosing how much money to invest, the players watched nervously as their investments either rose or fell in value. The game continued for 20 rounds, and the subjects got to keep their earnings. One interesting twist was that instead of using random simulations of the stock market, Montague relied on distillations of data from famous historical markets. Montague had people “play” the Dow of 1929, the Nasdaq of 1998, and the S&P 500 of 1987, so the neural responses of investors reflected real-life bubbles and crashes.

The scientists immediately discovered a strong neural signal that drove many of the investment decisions. The signal was fictive learning. Take, for example, this situation. A player has decided to wager 10 percent of her total portfolio in the market, which is a rather small bet. Then she watches as the market rises dramatically in
value. At this point, the regret signal in the brain — a swell of activity in the ventral caudate, a reward area rich in dopamine neurons — lights up. While people enjoy their earnings, their brain is fixated on the profits they missed, figuring out the difference
between the actual return and the best return “that could have been.” The more we regret a decision, the more likely we are to do something different the next time around. As a result investors in the experiment naturally adapted their investments to the ebb and flow of the market. When markets were booming, as in the Nasdaq bubble of the late 1990s, people perpetually increased their investments.

But fictive learning isn’t always adaptive. Montague argues that these
computational signals are also a main cause of financial bubbles. When
the market keeps going up, people are naturally inclined to make
larger and larger investments in the boom. And then, just when
investors are most convinced that the bubble isn’t a bubble — many of
Montague’s subjects eventually put all of their money into the booming
market — the bubble bursts. The Dow sinks, the Nasdaq collapses. At
this point investors race to dump any assets that are declining in
value, as their brain realizes that it made some very expensive
prediction errors. That’s when you get a financial panic.

Such fictive-error learning signals aren’t relevant only for stock
market investors. Look, for instance, at addiction. Dopamine has long
been associated with addictive drugs, such as cocaine, that overexcite
these brain cells. The end result is that addicts make increasingly
reckless decisions, forgoing longterm goals for the sake of an
intensely pleasurable short-term fix. “When you’re addicted to a drug,
your brain is basically convinced that this expensive white powder is
worth more than your marriage or life,” Montague says. In other words
addiction is a disease of valuation: Dopamine cells have lost track of
what’s really important.

Montague wanted to know which part of the dopamine system was
distorted in the addicted brain. He began to wonder if addiction was,
at least in part, a disease of fictive learning. Addicted smokers will
continue to smoke even when they know it’s bad for them. Why can’t
they instead revise their models of reward? Last year Montague decided
to replicate his stock market study with a large group of chronic
smokers. It turned out that smokers were perfectly able to compute a
“what if” learning signal, which allowed them to experience regret.
Like nonsmokers they realized that they should have invested
differently in the stock market. Unfortunately, this signal had no
impact on their decision making, which led them to make significantly
less money during the investing game. According to Montague, this data
helps explain why smokers continue to smoke even when they regret it.
Although their dopamine neurons correctly compute the rewards of an
extended life versus a hit of nicotine — they are, in essence, asking
themselves, “What if I don’t smoke this cigarette?” — their brain
doesn’t process the result. That feeling of regret is conveniently
ignored. They just keep on lighting up.

Montague exudes the confidence of a scientist used to confirming his
hypotheses. He buzzes with ideas for new experiments — ” I get bored
rather easily,” he says — and his lab is constantly shifting
direction, transitioning from dopamine to neuroeconomics to social
neuroscience. Montague is currently consumed with questions about how
people interact when they’re part of a group. “A mob or a market is
not just a collection of discrete individuals,” he says. “It’s
something else entirely. You would do things in a group that you would
never do by yourself. But what’s happening in your brain? We’ve got
all these sociological studies but no hard data.” Montague’s been
warned that the project is too complicated, that social interactions
are too subtle and complex to pick up in a scanner, but he’s convinced
otherwise. “If I’d listened to the naysayers,” he says, “I’d still be
studying honeybees.”

Montague’s experiments take advantage of his unique fMRI setup. He has
four people negotiate with one another as they decide how much to
offer someone else during an investing game. While the group is
bickering, Montague is monitoring the brain activity of everyone
involved. He’s also infiltrated the group with a computer player that
has been programmed to act just like a person with borderline
personality disorder. The purpose of this particular experiment is to
see how “one bad apple” can lead perfect strangers to also act badly.
While Montague isn’t ready to share the results — he’s still gathering
data — what he’s found so far is, he says, “stunning, shocking
even…. For me the lesson has been that people act very badly in
groups. And now we can see why.”

Such exuberance is well earned. In the space of a few short years,
Montague has taken his theoretical model of learning — a model he
borrowed from some old computer science textbooks — and shown that
it’s an essential part of the human brain. He’s linked the
transactions of a single neurotransmitter to a dizzying array of
behaviors, so that it’s now possible to draw a straight line between
monkeys craving juice and stock market bubbles. A neurotransmitter
that wasn’t supposed to matter is now our most important clue into the
secret messages of the mind and the breakdown of social graces. The
code hasn’t been broken. But for the first time, it’s getting cracked.

Jonah Lehrer
email : jonah.lehrer [at] gmail [dot] com



“In a fiduciary relation one person justifiably reposes confidence,
good faith, reliance and trust in another whose aid, advice or
protection is sought in some matter. In such a relation good
conscience requires one to act at all times for the sole benefit and
interests of another, with loyalty to those interests. A fiduciary
duty [1] is the highest standard of care at either equity or law. In
English common law the fiduciary relation is arguably the most
important concept within the portion of the legal system known as
equity. In the United Kingdom, the Judicature Acts merged the courts
of Equity (historically based in England’s Court of Chancery) with the
courts of common law, and as a result the concept of fiduciary duty
also became usable in common law courts. When a fiduciary duty is
imposed, equity requires a stricter standard of behavior than the
comparable tortious duty of care at common law. It is said the
fiduciary has a duty not to be in a situation where personal interests
and fiduciary duty conflict, a duty not to be in a situation where his
fiduciary duty conflicts with another fiduciary duty, and a duty not
to profit from his fiduciary position without express knowledge and
consent. A fiduciary cannot have a conflict of interest. It has been
said that fiduciaries must conduct themselves “at a level higher than
that trodden by the crowd”[2] and that “[t]he distinguishing or
overriding duty of a fiduciary is the obligation of undivided

“Self-dealing trustee, an attorney, a corporate officer, or other
fiduciary that consists of taking advantage of his position in a
transaction and acting for his own interests rather than for the
interests of the beneficiaries of the trust, corporate shareholders,
or his clients. Self-dealing may involve misappropriation or
usurpation of corporate assets or opportunities. Michael McDonald,
Ph.D, Chair of Applied Ethics at The University of British Columbia
provides examples based from this book: “using your government
position to get a summer job for your daughter”.”

“In contrast to enlightened self-interest is simple greed or the
concept of “unenlightened self-interest”, in which it is argued that
when most or all persons act according to their own myopic
selfishness, that the group suffers loss as a result of conflict,
decreased efficiency because of lack of cooperation, and the increased
expense each individual pays for the protection of their own
interests. If a typical individual in such a group is selected at
random, it is not likely that this person will profit from such a
group ethic. Some individuals might profit, in a material sense, from
a philosophy of greed, but it is believed by proponents of enlightened
self-interest that these individuals constitute a small minority and
that the large majority of persons can expect to experience a net
personal loss from a philosophy of simple unenlightened selfishness.
Unenlightened self-interest can result in the tragedy of the commons.”

by Garrett Hardin  /  December 1968

Pathogenic Effects of Conscience
The long-term disadvantage of an appeal to conscience should be enough
to condemn it; but has serious short-term disadvantages as well. If we
ask a man who is exploiting a commons to desist “in the name of
conscience,” what are we saying to him? What does he hear? –not only
at the moment but also in the wee small hours of the night when, half
asleep, he remembers not merely the words we used but also the
nonverbal communication cues we gave him unawares? Sooner or later,
consciously or subconsciously, he senses that he has received two
communications, and that they are contradictory: (i) (intended
communication) “If you don’t do as we ask, we will openly condemn you
for not acting like a responsible citizen”; (ii) (the unintended
communication) “If you do behave as we ask, we will secretly condemn
you for a simpleton who can be shamed into standing aside while the
rest of us exploit the commons.”

Everyman then is caught in what Bateson has called a “double bind.”
Bateson and his co-workers have made a plausible case for viewing the
double bind as an important causative factor in the genesis of
schizophrenia (17). The double bind may not always be so damaging, but
it always endangers the mental health of anyone to whom it is applied.
“A bad conscience,” said Nietzsche, “is a kind of illness.” To conjure
up a conscience in others is tempting to anyone who wishes to extend
his control beyond the legal limits. Leaders at the highest level
succumb to this temptation. Has any President during the past
generation failed to call on labor unions to moderate voluntarily
their demands for higher wages, or to steel companies to honor
voluntary guidelines on prices? I can recall none. The rhetoric used
on such occasions is designed to produce feelings of guilt in

For centuries it was assumed without proof that guilt was a valuable,
perhaps even an indispensable, ingredient of the civilized life. Now,
in this post-Freudian world, we doubt it. Paul Goodman speaks from the
modern point of view when he says: “No good has ever come from feeling
guilty, neither intelligence, policy, nor compassion. The guilty do
not pay attention to the object but only to themselves, and not even
to their own interests, which might make sense, but to their
anxieties” (18). One does not have to be a professional psychiatrist
to see the consequences of anxiety. We in the Western world are just
emerging from a dreadful two-centuries-long Dark Ages of Eros that was
sustained partly by prohibition laws, but perhaps more effectively by
the anxiety-generating mechanism of education. Alex Comfort has told
the story well in The Anxiety Makers (19); it is not a pretty one.

Since proof is difficult, we may even concede that the results of
anxiety may sometimes, from certain points of view, be desirable. The
larger question we should ask is whether, as a matter of policy, we
should ever encourage the use of a technique the tendency (if not the
intention) of which is psychologically pathogenic. We hear much talk
these days of responsible parenthood; the coupled words are
incorporated into the titles of some organizations devoted to birth
control. Some people have proposed massive propaganda campaigns to
instill responsibility into the nation’s (or the world’s) breeders.
But what is the meaning of the word responsibility in this context? Is
it not merely a synonym for the word conscience? When we use the word
responsibility in the absence of substantial sanctions are we not
trying to browbeat a free man in a commons into acting against his own
interest? Responsibility is a verbal counterfeit for a substantial
quid pro quo. It is an attempt to get something for nothing. If the
word responsibility is to be used at all, I suggest that it be in the
sense Charles Frankel uses it (20). “Responsibility,” says this
philosopher, “is the product of definite social arrangements.” Notice
that Frankel calls for social arrangements–not propaganda.

Mutual Coercion Mutually Agreed upon
The social arrangements that produce responsibility are arrangements
that create coercion, of some sort. Consider bank-robbing. The man who
takes money from a bank acts as if the bank were a commons. How do we
prevent such action? Certainly not by trying to control his behavior
solely by a verbal appeal to his sense of responsibility. Rather than
rely on propaganda we follow Frankel’s lead and insist that a bank is
not a commons; we seek the definite social arrangements that will keep
it from becoming a commons. That we thereby infringe on the freedom of
would-be robbers we neither deny nor regret.

The morality of bank-robbing is particularly easy to understand
because we accept complete prohibition of this activity. We are
willing to say “Thou shalt not rob banks,” without providing for
exceptions. But temperance also can be created by coercion. Taxing is
a good coercive device. To keep downtown shoppers temperate in their
use of parking space we introduce parking meters for short periods,
and traffic fines for longer ones. We need not actually forbid a
citizen to park as long as he wants to; we need merely make it
increasingly expensive for him to do so. Not prohibition, but
carefully biased options are what we offer him. A Madison Avenue man
might call this persuasion; I prefer the greater candor of the word

Coercion is a dirty word to most liberals now, but it need not forever
be so. As with the four-letter words, its dirtiness can be cleansed
away by exposure to the light, by saying it over and over without
apology or embarrassment. To many, the word coercion implies arbitrary
decisions of distant and irresponsible bureaucrats; but this is not a
necessary part of its meaning. The only kind of coercion I recommend
is mutual coercion, mutually agreed upon by the majority of the people
affected. To say that we mutually agree to coercion is not to say that
we are required to enjoy it, or even to pretend we enjoy it. Who
enjoys taxes? We all grumble about them. But we accept compulsory
taxes because we recognize that voluntary taxes would favor the
conscienceless. We institute and (grumblingly) support taxes and other
coercive devices to escape the horror of the commons.

An alternative to the commons need not be perfectly just to be
preferable. With real estate and other material goods, the alternative
we have chosen is the institution of private property coupled with
legal inheritance. Is this system perfectly just? As a genetically
trained biologist I deny that it is. It seems to me that, if there are
to be differences in individual inheritance, legal possession should
be perfectly correlated with biological inheritance–that those who
are biologically more fit to be the custodians of property and power
should legally inherit more. But genetic recombination continually
makes a mockery of the doctrine of “like father, like son” implicit in
our laws of legal inheritance. An idiot can inherit millions, and a
trust fund can keep his estate intact. We must admit that our legal
system of private property plus inheritance is unjust–but we put up
with it because we are not convinced, at the moment, that anyone has
invented a better system. The alternative of the commons is too
horrifying to contemplate. Injustice is preferable to total ruin.

It is one of the peculiarities of the warfare between reform and the
status quo that it is thoughtlessly governed by a double standard.
Whenever a reform measure is proposed it is often defeated when its
opponents triumphantly discover a flaw in it. As Kingsley Davis has
pointed out (21), worshippers of the status quo sometimes imply that
no reform is possible without unanimous agreement, an implication
contrary to historical fact. As nearly as I can make out, automatic
rejection of proposed reforms is based on one of two unconscious
assumptions: (i) that the status quo is perfect; or (ii) that the
choice we face is between reform and no action; if the proposed reform
is imperfect, we presumably should take no action at all, while we
wait for a perfect proposal.

But we can never do nothing. That which we have done for thousands of
years is also action. It also produces evils. Once we are aware that
the status quo is action, we can then compare its discoverable
advantages and disadvantages with the predicted advantages and
disadvantages of the proposed reform, discounting as best we can for
our lack of experience. On the basis of such a comparison, we can make
a rational decision which will not involve the unworkable assumption
that only perfect systems are tolerable.

American Dream a Biological Impossibility, Neuroscientist Says
by Brandon Keim  /  October 21, 2008

What if people are biologically unsuited for the American dream? The
man posing that troubling question isn’t just another lefty activist.
It’s Peter Whybrow, head of the Semel Institute for Neuroscience and
Behavior at UCLA. “We’ve been taught, especially in America, that
happiness will be at the end of some sort of material road, where we
have lots and lots of things that we want,” said Whybrow, a 2008
PopTech Fellow and author of American Mania: When More Is Not Enough.
“We’ve set up all sorts of tricks to delude ourselves into thinking
that it’s fine to get what you want immediately.”

He paints a disturbing picture of 21st century American life, where
behavioral tendencies produced by millions of years of scarcity-driven
evolution don’t fit the social and economic world we’ve constructed.
Our built-in dopamine-reward system makes instant gratification highly
desirable, and the future difficult to balance with the present. This
worked fine on the savanna, said Whybrow, but not the suburbs: We
gorge on fatty foods and use credit cards to buy luxuries we can’t
actually afford. And then, overworked, underslept and overdrawn, we
find ourselves anxious and depressed.

That individual weakness is reflected at the social level, in markets
that have outgrown their agrarian roots and no longer constrain our
excesses — resulting in the current economic crisis, in which
America’s unpaid bills came due with shocking speed. But with this
crisis, said Whybrow, comes the opportunity to rethink how Americans
live, as individuals and as a nation, and build a country that works.
“We’re primed for doing things immediately. We’re poor at planning for
the future, unless we get into circumstances like these, where we’re
forced to think cleverly about what to do next,” he said. “In a way,
this financial meltdown is a healthy thing for us. We’ll think
intuitively again.”

Foremost among Whybrow’s targets is the modern culture of spending on
credit. “The instinctive brain is well ahead of the intellectual
brain. Credit cards promise us that you can have what you want now,
and postpone payment until later,” he said. Buying just feels good, in
a biological sense — and that instant reward outweighs the threat of
future bills. Of course, many people use credit cards to pay bills and
put food on the table, rather than buy flat-screen televisions and new
computers. “That unfortunate reality,” said Whybrow, “is produced by
an out-of-control economic system” geared toward perpetual growth.
That is no more natural a state for markets than a mall food court is
natural for individuals whose metabolic heredity treats fats and
sugars as rarities. “Once upon a time, this economic system worked.
But for the invisible hand of the free market to function, it needed
to be balanced. And that balance is gone,” he said.

Markets were once agrarian institutions, said Whybrow, which balanced
the gratification of individuals with the constraints of small
communities, where people looked their trade partners in the eye, and
transactions were bounded by time and geography. With those
constraints removed, markets have engaged in the buy-now, pay-later
habits of college kids who don’t read the fine print on their credit
card bills. “You can think about markets in the same way as
individuals who mortgaged their future — except markets did it with
other people’s money,” he said. “You end up with a Ponzi scheme
predicated on the idea that we can get something now, rather than
having to wait. And it all comes back to the same instinctual drive.”
And now that the fundamental excesses of our economy have been so
painfully exposed, with trillions of dollars vanishing from the
American economy in just a few days, we have to think about changing
both the economy and ourselves.

The answers aren’t easy, Whybrow cautioned — but they do exist. People
can think creatively about jumping from the treadmills of bad jobs and
unmeetable needs; and even if this isn’t always possible, they can
teach their children to live modestly and within their means. Urban
engineers can design cities that allow people to live and work and
shop in the same place. Governments can, at the insistence of their
citizens, provide the social safety nets on which social mobility,
stagnant for the last 50 years, is based. And we can — however much it
hurts — look to Europe for advice. “America has always believed that
it was the perfect society. When you have that mythology driving your
culture, it’s hard to look around and say, ‘Is someone else doing it
better than us?'” said Whybrow. “But you can trace the situation we’re
in to our evolutionary origins. Now that we find ourselves in the
middle of this pseudo-abundance, we’re in trouble. And the fantasy
that we can restart the American dream just isn’t true.”

Peter Whybrow
email : pwhybrow [at] mednet.ucla [dot] edu

Humankind evolved to seek rewards and avoid risks but not to invest
by Jason Zweig  /  August 23 2007

For most purposes in daily life, your brain is a superbly functioning
machine, steering you away from danger while guiding you toward basic
rewards like food, shelter and love. But that brilliant machine can
lead you astray when it comes to investing. You buy high only to sell
low. You try to time the market. You follow the crowd. You make the
same mistakes again. And again. How come?

We’re beginning to get answers. Scientists in the emerging field of
“neuroeconomics” – a hybrid of neuroscience, economics and psychology
– are making stunning discoveries about how the brain evaluates
rewards, sizes up risks and calculates probabilities. With the wonders
of imaging technology we can observe the precise neural circuitry that
switches on and off in your brain when you invest. Those pictures make
it clear that your investing brain often drives you to do things that
make no logical sense – but make perfect emotional sense. Your brain
developed to improve our species’ odds of survival. You, like every
other human, are wired to crave what looks rewarding and shun what
seems risky.

To counteract these impulses, your brain has only a thin veneer of
modern, analytical circuits that are often no match for the power of
the ancient parts of your mind. And when you win, lose or risk money,
you stir up some profound emotions, including hope, surprise, regret
and the two we’ll examine here: greed and fear. Understanding how
those feelings – as a matter of biology – affect your decision-making
will enable you to see as never before what makes you tick, and how
you can improve, as an investor.

Greed: The thrill of the chase
Why is it so hard for most of us to learn that the old saying “Money
doesn’t buy happiness” is true? After all, we feel as if it should.
The answer lies in a cruel irony that has enormous implications for
financial behavior: Our brains come equipped with a biological
mechanism that is more aroused when we anticipate a profit than when
we get one. I lived through the rush of greed in an experiment run by
Brian Knutson, a neuroscientist at Stanford University. Knutson put me
into a functional magnetic resonance imaging (fMRI) scanner to trace
my brain activity while I played a kind of investing video game that
he had designed. By combining an enormous magnet and a radio signal,
the fMRI scanner pinpoints momentary changes in the level of oxygen as
blood ebbs and flows within the brain, enabling researchers to map the
neural regions engaged by a particular task.

In Knutson’s experiment, a display inside the fMRI machine showed me a
sequence of shapes that each signaled a different amount of money:
zero ($0), medium ($1) or large ($5). If the symbol was a circle, I
could win the dollar amount displayed; if it was a square, I could
lose the amount shown. After each shape came up, between 2 and 2½
seconds would pass – that’s the anticipation phase, when I was on
tenterhooks waiting for my chance to win or lose – and then a white
square would appear for a split second.

To win or avoid losing the amount I had been shown, I had to click a
button with my finger when the square appeared. At the highest of the
three levels of difficulty, I had less than one-fifth of a second to
hit the button. After each try the screen showed how much I’d just won
or lost and updated my cumulative score. When a shape signaling a
small reward or penalty appeared, I clicked placidly and either won or
lost. But if a circle marked with the symbols of a big, easy payout
came up, I could feel a wave of expectation sweep through me. At that
moment, the fMRI scan showed, the neurons in a reflexive, or
emotional, part of my brain called the nucleus accumbens fired like
wild. When Knutson measured the activity tracked by the scan, he found
that the possibility of winning $5 set off twice as strong a signal in
my brain as the chance at gaining $1 did.

On the other hand, learning the outcome of my actions was no big deal.
Whenever I captured the reward, Knutson’s scanner found that the
neurons in my nucleus accumbens fired much less intensely than they
had when I was hoping to get it. Based on the dozens of people Knutson
has studied, it’s highly unlikely that your brain would respond much
differently. Why does the reflexive part of the brain make a bigger
deal of what we might get than of what we do get? That function is
part of what Brian Knutson’s mentor, Jaak Panksepp of Bowling Green
State University in Ohio, calls “the seeking system.”

Over millions of years of evolution, it was the thrill of anticipation
that put our senses in a state of high awareness, bracing us to
capture uncertain rewards. Our anticipation circuitry, says Paul
Slovic, a psychologist at the University of Oregon, acts as a “beacon
of incentive” that enables us to pursue rewards that can be earned
only with patience and commitment. If we derived no pleasure from
imagining riches down the road, we would grab only at those gains that
loom immediately in front of us. Thus our seeking system functions
partly as a blessing and partly as a curse. We pay close attention to
the possibility of coming rewards, but we also expect that the future
will feel better than it does once it turns into the present.

A vivid example of this is the stock of Celera Genomics Group. In
September 1999, Celera began sequencing the human genome. By
identifying each of the 3 billion molecular pairings that make up
human DNA, the company could make one of the biggest leaps in the
history of biotechnology. Investors went wild with anticipation,
driving the stock to a peak of $244 in early 2000. Then, on June 26,
Celera announced that it had completed cracking the code. How did the
stock react? By tanking. It dropped 10.2% that day and another 12.7%
the next day. Nothing had occurred to change the company’s fortunes
for the worse. Quite the contrary: Celera had achieved a scientific
miracle. So what happened? The likeliest explanation is simply that
the anticipation of Celera’s success was so intense that reality was a
letdown. Getting exactly what they wished for left investors with
nothing to look forward to, so they got out and the stock crashed.

Greed: The stuff of memories
Researchers in Germany tested whether anticipating a financial gain
can improve memory. A team of neurologists scanned people’s brains
with an fMRI machine while showing them pictures of objects like a
hammer or a car. Some images were paired with the chance to win half a
euro, while others led to no reward. The participants soon learned
which pictures were reliably associated with the prospect of making
money, and the scan showed that their anticipation circuits fired
furiously when those images appeared. Immediately afterward, the
researchers showed the participants a larger set of pictures,
including some that had not been displayed inside the scanner. People
were highly accurate at distinguishing the pictures they had seen
during the experiment and equally adept at recognizing which of those
pictures had predicted a gain.

Three weeks later the participants came back to the lab, where they
were shown the pictures again. This time people could even more
readily distinguish the pictures that had signaled a financial gain
from those that had not – although they hadn’t laid eyes on them in 21
days! Astounded, the researchers went back and re-examined the fMRI
scans from three weeks earlier. It turned out that the potentially
rewarding pictures had set off more intense activation not only in the
anticipation circuits but also in the hippocampus, a part of the brain
where long-term memories live.

The fire of expectation, it seems, somehow sears the memory of
potential rewards more deeply into the brain. “The anticipation of
reward,” says neurologist Emrah Düzel, “is more important for memory
formation than is the receipt of reward.” Anticipation has another
unusual neural wrinkle. Brian Knutson has found that while your
reflexive brain is highly responsive to variations in the amount of
reward at stake, it is much less sensitive to changes in the
probability of receiving a reward.

If a lottery jackpot was $100 million and the posted odds of winning
fell from one in 10 million to one in 100 million, would you be 10
times less likely to buy a ticket? If you’re like most people, you
probably would shrug, say “A long shot’s a long shot” and be just as
happy buying a ticket as before. That’s because, as economist George
Loewenstein of Carnegie Mellon University explains, the “mental image”
of $100 million sets off a burst of anticipation in the reflexive
regions of your brain. Only later will the analytical, or reflective,
areas calculate that you’re less likely to win than Ozzy Osbourne is
to be elected Pope. When possibility is in the room, probability goes
out the window. It’s no different when you buy a stock or a mutual
fund: Your expectation of scoring a big gain elbows aside your ability
to evaluate how likely you are to earn it. That means your brain will
tend to get you into trouble whenever you’re confronted with an
opportunity to buy an investment with a hot – but probably
unsustainable – return.

Fear: What are you afraid of?
Here are two questions that might, at first, seem silly.
1 Which is riskier: a nuclear reactor or sunlight?
2 Which animal is responsible for the greatest number of human deaths
in the U.S.? a) Alligator b) Deer c) Snake d) Bear e) Shark

Now let’s look at the answers. The worst nuclear accident in history
occurred when the reactor at Chernobyl, Ukraine melted down in 1986.
Early estimates were that tens of thousands of people might be killed
by radiation poisoning. By 2006, however, fewer than 100 had died.
Meanwhile, nearly 8,000 Americans are killed every year by skin
cancer, commonly caused by overexposure to the sun.

In the typical year, deer are responsible for roughly 130 human
fatalities – seven times more than alligators, bears, sharks and
snakes combined. Deer, of course, don’t attack. Instead, they step in
front of cars, causing deadly collisions. None of this means that
nuclear radiation is good for you or that rattlesnakes are harmless.
What it does mean is that we are often most afraid of the least likely
dangers and frequently not worried enough about the risks that have
the greatest chances of coming home to roost.

We’re no different when it comes to money. Every investor’s worst
nightmare is a stock market collapse like the crash of 1929. According
to a recent survey of 1,000 investors, there’s a 51% chance that “in
any given year, the U.S. stock market might drop by one-third.” In
fact, the odds that U.S. stocks will lose a third of their value in a
given year are around 2%. The real risk isn’t that the market will
melt down but that inflation will erode your savings. Yet only 31% of
the people surveyed were worried that they might run out of money
during their first 10 years of retirement.

If we were logical we would judge the odds of a risk by asking how
often something bad has actually happened under similar circumstances.
Instead, explains psychologist Daniel Kahneman, “we tend to judge the
probability of an event by the ease with which we can call it to
mind.” The more recently it occurred or the more vivid our memory of
something like it in the past, the more “available” an event will be
in our minds – and the more probable its recurrence will seem.

Fear: The hot button of the brain
Deep in the center of your brain, level with the top of your ears,
lies a small, almond-shaped knob of tissue called the amygdala (ah-mig-
dah-lah). When you confront a potential risk, this part of your
reflexive brain acts as an alarm system – shooting signals up to the
reflective brain like warning flares. (There are two amygdalas, one on
each side of your brain.) The result is that a moment of panic can
wreak havoc on your investing strategy. Because the amygdala is so
attuned to big changes, a sudden drop in the market tends to be more
upsetting than a longer, slower decline, even if it’s greater in

On Oct. 19, 1987, the U.S. stock market plunged 23% – a deeper one-day
drop than the crash of ’29. Big, sudden and inexplicable, the ’87
crash was exactly the kind of event that sparks the amygdala. The
memory was hard to shake: In 1988, U.S. investors sold $15 billion
more worth of shares in stock mutual funds than they bought, and their
net purchases of stock funds didn’t recover to pre-crash levels until
1991. One bad Monday disrupted the behavior of millions of people for
years. There was something more at work here than merely investors’
individual fears. Anyone who has ever been a teenager knows that peer
pressure can make you do things as part of a group that you might
never do on your own.

But do you make a conscious choice to conform or does the herd exert
an automatic, almost magnetic, force? People were recently asked to
judge whether three-dimensional objects were the same or different.
Sometimes the folks being tested made these choices in isolation.
Other times they first saw the responses of four “peers” (who were, in
fact, colluding with the researcher).

When people made their own choices, they were right 84% of the time.
When the peer group all made the wrong choice, however, the
individuals being tested chose correctly just 59% of the time. Brain
scans showed that when the subjects followed the peer group,
activation in parts of their frontal cortex decreased, as if social
pressure was somehow overpowering the reflective, or analytical,
brain. When people did buck the consensus, brain scans found intense
firing in the amygdala.

Neuroscientist Gregory Berns, who led the study, calls this flare-up a
sign of “the emotional load associated with standing up for one’s
belief.” Social isolation activates some of the same areas in the
brain that are triggered by physical pain. In short, you go along with
the herd not because you want to but because it hurts not to. Being
part of a large group of investors can make you feel safer when
everything is going great. But once risk rears its ugly head, there’s
no safety in numbers.

Fear: Fright makes right
I learned how my own amygdala reacts to risk when I participated in an
experiment at the University of Iowa. First I was wired up with
electrodes and other monitoring devices to track my breathing,
heartbeat, perspiration and muscle activity. Then I played a computer
game designed by neurologists Antoine Bechara and Antonio Damasio.
Starting with $2,000 in play money, I clicked a mouse to select a card
from one of four decks displayed on the monitor in front of me. Each
“draw” of a card made me either “richer” or “poorer.”

I soon learned that the two left decks were more likely to produce big
gains but even bigger losses, while the two right decks blended more
frequent but smaller gains with a lower chance of big losses.
Gradually I began picking most of my cards from the decks on the
right; by the end of the experiment I had drawn 24 cards in a row from
those safer decks. Afterward I looked over the printout that traced my
spiking heartbeat and panting breath as the red alert of risk swept
through my body, even though I didn’t recall ever feeling nervous.

Early on, when I drew a card that lost me $1,140, my pulse rate shot
from 75 to 145. After a few more bad losses from the risky decks, my
body would start reacting even before I selected a card from one of
them. Merely moving the cursor over the risky decks was enough to make
my physiological functions go haywire. My decisions, it turns out, had
been driven by fear even though the “thinking” part of my mind had no
idea I was afraid. Ironically – and thankfully – this highly emotional
part of our brain can actually help us act more rationally.

When Bechara and Damasio run their card-picking game with people whose
amygdalas have been injured, the subjects never learn to avoid
choosing from the riskier decks. If told that they have just lost
money, their body doesn’t react; they can no longer feel a financial
loss. Without the saving grace of fear, the analytical parts of the
brain will keep trying to beat the odds, with disastrous results. “The
process of deciding advantageously,” concludes Damasio, “is not just
logical but also emotional.”


Jason Zweig
email : info [at] jasonzweig [dot] com / jason.zweig [at] wsj [dot] com /
intelligentinvestor [at] wsj [dot] com

Synopsis : Predictably Irrational by Dan Ariely
by George Gibson  /  September 18, 2008

[This detailed, chapter-by-chapter précis of Dan Ariely’s Predictably
Irrational: The Hidden Forces That Shape Our Decisions is a guest post
by George Gibson, a colleague of mine at Xerox. George originally
posted it on our internal blogs as a series, and I found it so much
fun to read, I asked if I could repost it on ribbonfarm. So here you

Chapter 1: The Truth About Relativity
This was clearly the most interesting of the books from my summer
reading list. Let me be clear that though I don’t buy all of the
points Dan tries to make, I find them all interesting and worthy of
thought. With any luck we can begin a real discussion of his ideas and
observations in the commentary. That means I’ll attempt (not always
successfully) to keep my opinion out of the body of this piece, and
reserve that for any commentary that might develop. The real point
here is to get you interested enough to read the book yourself.

“Most people don’t know what they want until they see it in context.”
Control the context and you can change their decisions. This chapter
is about how our decision making as skewed from what we might think of
as rational by the use of comparisons, anchor points and some about
the magic of “FREE!”. The Economist offered three subscription
* Electronic alone: $59
* Print alone: $125
* Electronic and print: $125

So what would you guess people would choose? Would anyone choose the
Print alone option forgoing a “FREE!” electronic subscription? Not
likely. So, why is it even offered? Testing with 100 Sloan School
students, 16 chose Electronic alone and 84 chose the combined
Electronic and print option. Nobody chose the Print alone option (boy
those Sloan folks are smart aren’t they?). However when the irrelevant
option, the one nobody chose, was eliminated, another, equally bright,
hundred Sloan students divided 68 for Electronic alone and only 32
chose Electronic and print. So…what happened here?

Ariely makes the unpleasant but often correct assertion, “Thinking is
difficult and sometimes unpleasant.” Cues that allow us to establish
the relative value of various offerings, then, reduce the required
thought effort. What the Economist offered was a no-brainer; while we
might not be certain if the print subscription was worth more than
twice the electronic version, the combination of the two was clearly
worth more that the print version alone.

The chapter contains many examples of this effect including movie
script jokes, bread makers, houses, vacations, salaries and even
potential dates. Two general frameworks are noted as particularly
common. First is the inclusion of a slightly degraded offering near
the offering you want the customer to accept increases the likelihood
that he or she will make your desired choice (read the choice of
potential dating partners section of the book for this one). Next is
the pick the middle one strategy in which three offerings are
presented with the middle of them as the sellers preferred choice. So
often the butt of jokes, car companies even provide an interesting
example. What portion of the firm’s profits on most platforms come
from the middle of the line offering?

There are take-aways here for both the seller and buyer. Politely
said, you as a seller can help guide your customer through the
bewildering array of choices by providing helpful contextual
information (I’ll let each of you put your cynical hat on and restate
that one for fun!) As a consumer it is helpful to understand the
framing a seller is likely to present you with and do some of that
nasty thinking work up front deciding whether or not the seller’s
preferred context and yours are the same.

Chapter 2: The Fallacy of Supply and Demand
This chapter is at the heart of Ariely’s argument. Classical economics
says that our decisions about resource allocation reflect our relative
valuation of the various investment alternatives. If I buy more wine
than cheese it’s because I derive greater utility (more than just
usefulness by the way) from the juice of the grape. There are clear
limits of course, I am unlikely to allow myself to starve and will
occasionally buy cheese, or buy cheese when the price is low enough.
But the general point remains, I am willing to pay more for those
things from which I derive greater utility.

Not so says our man Dan. How much a person is willing to pay for
something is determined or at least significantly affected by a
variety of factors which have nothing to do with any benefit that he
or she derives from that purchase. Do you remember what Tom Sawyer did
with his chore, whitewashing a fence? Review that first and you’ll be
more open to these arguments.

He starts with the story of black pearls. There were essentially none
on the market so there was no objective way of establishing price.
What happened was they were shown in advertising and in Harry
Winston’s toney store along rubies and diamonds at a very high price.
This initial association served to effectively anchor the price and
therefore, going forward, future prices were high since the initial
frame in which people were introduced to the product was among high
priced goods.

He likens this anchor price phenomenon to that of imprinting. We are
all goslings, fixed on that first object. He’s done a lot of really
neat experiments to support his point. None of them are completely
convincing but they certainly are thought provoking.

Consider, for example some really interesting experiments suggesting
that thinking about a number – any number – before considering what
you are willing to pay for an item whose market price you do not know
– actually effects what you would be willing to pay for that item. In
one of the experiments described a group of students were asked to
write down the last two digits of their social security number before
they indicated how much they were willing to pay for a bottle of wine,
a cordless keyboard, some imported chocolates. Guess what! The amounts
they were willing to pay actually correlated with those social
security number fragments they had previously written down. I spend
time much time on this particular experiment precisely because the
results are so bizarre.

He cites a number of other experiments and observations that support
not only that an anchoring affect, unrelated to market value or
derived utility. One of the ones he cites that I have experienced
personally is the persistence of old concepts of housing value when
you move from one market to another. When Ginny and I moved here from
Dayton, Ohio fifteen years ago, we went a long time looking for a
house that cost about as much as the one we were leaving. Although
Rochester can hardly be described as a high cost area, real estate was
roughly twice as expensive per square foot here than in Dayton. It
took us literally months to stop looking to replace our Dayton house
with one of similar price here and adjust to the new price scale we

I won’t spoil your fun and go through all the examples and neat
concepts, “coherent arbitrariness” being among my favorites, but I
will reiterate one of his most powerful points. Knowing that it is
entirely possible that some factors not related to the real value a
product or service crate for you may be affecting how much of that
good you consume and how much you are paying for it, be mindful.
Carefully examine your purchasing behavior and make sure you actually
believe that the money you allocate to consumption of various
offerings really advances your overall well being more than the next
best use of those funds. So when you’re paying for your $4 cup of
coffee at Starbucks (as you know I do), revisit the fundamental
decision – should I be buying cheaper coffee at McDonalds or even
bringing in coffee from home or should I be drinking water, of the
free sort.

But if first anchors are so significant and long lived, how come you
ever bought that first cup at $4 let alone the third? That first day
you walked into Starbucks wasn’t your first experience with buying
coffee. You had plenty of time and experience to establish an anchor
backed my years of repeated experience to reinforce it. Howard Shultz
had to work hard to make Starbucks fundamentally different than the
other places you might by coffee – not just quantitatively but
qualitatively. It just had to be unlike the other places you might
stop when you wanted coffee – you had to get something more. Their
success is the proof of their success there and the most recent
stumbling in earnings can be attributed to some extent as the success
of McDonalds and Duncan Donuts in making it just about the coffee.

Chapter 3. The Cost of Zero Cost
Why We Often Pay Too Much When We Pay Nothing
“Zero is not just another price….zero is an emotional hot button – a
source of irrational excitement.”

The allure of free stuff drives us to make all sorts of irrational
purchasing decisions. “Buy 2 get 1 FREE!!,” motivates a fair share of
people to buy two of something they wouldn’t have bought one of except
to get that free thing. As you’ve picked up by now, Ariely’s MO is to
do experiments to probe economic rationality or the lack thereof. In
this matter the first experiment involved selling chocolate on the MIT
campus albeit in a strange way. Limiting chocolate purchases to one
per customer they offered a choice between Lindt truffle and a Hershey
Kiss. A huge difference in quality reflected in a substantial
difference in price. The truffle sold for $0.15, half off the bulk
retail price, and the Kiss sold for $0.01. Students split on their
purchases with 73% choosing the truffle and 27% choosing the kiss.
Next they lowered the price of each by $0.01; the truffle at $0.14 and
the Kiss was FREE!! Now 69% of students choose the Kiss; same price
difference, same expected benefit or enjoyment from eating the
chocolate but apparently there is an additional benefit of FREE!!

Again my purpose here is to serve as a teaser here not to reiterate
the book, I want you to read the book. Let’s just say that he did this
experiment a variety of ways and each time the proposition that FREE!!
distorts decision making was supported. He has some especially
interesting Halloween experiments and some real Amazon experience
supporting his assertion.

Chapter 4. The Cost of Social Norms:
Why We Are Happy to Do Things, but Not When We Are Paid to Do Them

I’m against wholesale quotations in reviews. So remember that this
isn’t a review, it’s meant to be a précis and teaser. This chapter
leads off with a story so compelling that I just have to present it

You are at your mother-in-law’s house for Thanksgiving dinner, and
what a sumptuous spread she has put on the table for you. The turkey
is roasted to a golden brown; the stuffing is homemade and exactly the
way you like it. Your kids are delighted: the sweet potatoes are
crowned with marshmallows. And your wife is flattered: her favorite
recipe for pumpkin pie has been chosen for desert.

The festivities continue into the late afternoon. You loosen your belt
and sip a glass of wine. Gazing fondly across the table at your mother-
in-law, you rise to your feet, pull out your wallet. “Mom, for all the
love you’ve put into this, how much do I owe you?” you say sincerely.
As silence descends on the gathering, you wave a handful of bills. “Do
you think three hundred dollars will do it? No, wait, I should give
you four hundred.” Please fill in the blank with what you think will
happen next.

The rest of the chapter is devoted to some experiments (of course) and
some anecdotes that describe two separate frames in which we operate:
those of social norms and those of market norms. He compiles evidence
that social norms are more effective at motivating superior
performance than are market norms. The armed forces are an interesting
example. You didn’t really think that those soldiers in Iraq and
Afghanistan were there for the pay and to save money for college did
you? Those are nice perks (well the pay for low rank enlisted soldiers
sometimes leaves their families in poverty) but exactly how much money
would it take for you to risk your life like that? The actions we
barely hear on the news in the car as we travel back and forth to work
or have on as background during dinner, the acts of courage and
heroism are not motivated by the paycheck but by the social norms of
the service. One soldier I know said that you may join for your
country but, in a fire fight, you’re fighting for your buddies. Boy,
now there’s a powerful force. Powerful but, it turns out fragile.
After the dinner above, how long do you think it would be before the
narrator’s mother-in-law went out of her way for him?

In this chapter Dan provided the results of a number of experiments
showing that there is a particularly interesting difference between
the types and performance levels of tasks that can be produced when
the reward system is governed by “social norms.” In one set of
experiments he had people perform a simple computer task. Three groups
were paid varying amounts and one group was asked to do the task as as
a favor to the experimenter. Among those paid, those paid more
generally produced more in keeping with our idea of market behavior.
Those doing the experimenter a favor however, outperformed the highest
paid group. You can imagine all sorts of implications. One more
interesting twist however was that introducing market norms into the
conversation (talking about how much some folks had been paid) before
the volunteers worked destroyed the effect.

The most interesting set of things he explored based on these tenets
was the implications of personal in firm-level behavior: what should
you, and should a firm, leave in the arena of social norms and what in
the realm of market norms. Will extra productivity for a firm be most
effectively produced by market or social reinforcements? How about
employee loyalty in all its manifestations? What effect will a company
making clear that its relationship with its employees is purely
financial have on the performance of that company’s employees and
hence on the company itself. Is this an argument for a return to
paternalism? It seems unlikely. Is it at the heart of the oft vaunted
ability of small firms to “outperform” larger ones in some aspects of
innovation: perhaps.

Chapter 5. The Influence of Arousal
Why Hot is Hotter Than We Realize

One of the things I’ve learned about blogging, although it might not
be apparent, is that it’s a good idea to be brief. As you know I
seldom say in two words what I can say in five, this is an ongoing
challenge for me. This chapter however is one that encourages brevity.
The central hypothesis is that arousal, of all sorts, produces a
significant distortion of decision making. Decisions made in the heat
of the moment are notoriously badly made. Think road rage, think
victory celebration, think extreme thirst or hunger (I’ve always
wondered, just how hungry the first person was that saw a lobster and
thought, “hmmmm, that looks good”). There are all sorts of states of
arousal and given that this is a book by an experimentalist at a
university you can imagine that he describes experiments using
several. ‘Nuff said. You’re simply going to have to read the book to
get the details of what junior was doing in the name of behavioral
economics to supplement the pittance his parents were forcing him to
live on.

The major assertion of this chapter is that when we’re calm and
detached, we repeatably and significantly underestimate the effect of
altered mental states on our decision making. Of course we all know
that when we’re angry or in love or afraid or hot on the trail of a
particularly desirable objective like in a auction bidding war or when
we’ve had one too any drinks our decision making can suffer. Look at
the bad decisions made by the folks at Enron, Arthur Anderson or any
of a host of other companies. We know altered states of many kinds can
cause us to make bad decisions and so, forewarned we are forearmed
right? Not so much it turns out. The experimental subjects in this
chapter recognized that when they were excited they would make
decisions that were significantly different than those they would make
in a in the so called, cold light of day. They were asked to predict
behaviors or alternatives that they expect would change in the grips
of some emotionally charged state. However, when actually provoked and
queried again Dan’s experiments found that they consistently and
significantly underestimated the magnitude of the effect. His
prescription is a prevent defense. If you know that a certain
situations can cause you to make bad decisions, don’t put yourself in
those situations. This is another example of one of the jokes that, as
you know I believe, run the universe. It goes like this.
Patient: Doctor, doctor, it hurts when I go like this.
Doctor: Don’t go like that.

I’ll let you read the details but let’s all ask ourselves this;
knowing that we are highly likely to underestimate how much our
decision making will be changed in states of emotional turmoil of
varying sorts, how will we protect ourselves from being either patsies
of our emotions or manipulated by those willing to exploit this lever
for their gain?

Chapter 6: The Problem if Procrastination and Self-Control
Why We Can’t Make Ourselves Do What We Want to Do

Procrastination is probably the most common source of self-inflicted
wounds you or I are likely to suffer during our lives. Not necessarily
the source of the most significant ones but surely the greatest
number. From the petty (the “people” door on my garage has decayed to
the point that I will have to replace it) to the profound (I kept
meaning to start saving for retirement or dieting and exercising)
procrastination can leave nasty tracks in our lives.

Dan’s experiments here are perhaps the most limited of those he
describes in the book. Given the detail he presents it’d be hard to
judge their import if he turned up something new. Let me describe the
experiment. He compared three groups of students in a graduate
consumer behavior course. Each class was required to turn in three
papers over the course of the semester. One class was given strict and
equally spaced deadlines with a penalty for failing to meet the
deadline, A second class was told that they could turn the papers in
anytime before the end of the semester and that there was no reward
for being early. The third class was allowed to sign up for deadlines
spaced however they liked but, having committed to those deadlines,
there was a penalty for failing to meet them. Guess which group got
the best grades?

The group given the hard deadlines took first. The group with no
deadlines took last. The interesting point is that the other group,
those with self-selected deadlines did nearly as well as the first
group. Apparently, this tool, letting them pre-commit to a performance
standard was nearly as powerful as the externally imposed deadline.
Now since the experimenter graded the papers there is, of course, some
question about bias. There is also a significant degree of randomness
in this sort of grading process. In fact a great discussion of this is
in the other book from my reading list that I strongly recommend to
you, “The Drunkards Walk.” If Dan’s finding was revolutionary then we
might have some significant reservations. Pre-commitment is, however,
a well established technique. Really want to get something done? Write
a $500 check to some campaign or social cause based organization whose
ends you strongly oppose. Then give it to a friend and say, “If I
don’t accomplish X by Y send this check to these folks.” You’d be
amazed at what you can accomplish. This whole tack is a well
established result from game theory. Now let’s talk about some of the
ways Dan pictures using it.

Huge components of our health care costs are the results of
preventable diseases. What if your insurance company withdrew $200
dollars from your paycheck to cover the expense of a regular and
complete physical with the understanding that you would get that money
back IFF you kept your appointment for all of the required testing?
Maybe out on the lunatic fringe of health care thinking but
interesting. In this and other similar situations Dan suggests both
these voluntary pre-commitment models and the alternative of a
One of the most amusing suggestions he makes regards spending control,
especially credit card use. You may have heard the ice method. Some
people, to counter their impulsive use of consumer credit, put their
card(s) in a glass of water in the freezer. Thawing it (them) out to
use takes time allowing that arousal that we talked about last chapter
to fade. Of course there are simpler ways. Dan actually took one of
these suggestions to the executives of a major NY bank. Why, he said,
can’t a credit card record and automatically react in accordance with
pre-committed spending patterns. When you exceed your chosen limit
(which might be spending category specific) for instance, it would
decline more charges, or generate an email reporting your errant ways
to your spouse. He reports that the executives listened and thought it
was a good idea but never called him back. I would pay cash for a
recording of the conversation they had after he left.

There are lots of other approaches to controlling procrastination of
course. We’ll talk more about these later in the year. I confess that
this is a trait I personally fight. Let me just make two
recommendations other than pre-commitment. One is the time management
tool suite called “Getting Things Done” popularized by David Allen, or
alternately an approach which you can find described in a book called
“Making Work Work.” Julie Morgenstern.

Chapter 7: The High Price of Ownership
Why We Overvalue What We Have

Do you know of anyone whose house stays on the market not just for
months but for years? How about somebody who’s been driving around
with a “For Sale” sign in their car window long enough for you to
think it might actually be an accessory? What these folks have in
common is a valuation of what they are offering that does not match
the value in among the people to whom they are making the offer. These
are two quick examples but it turns out there are lots of other ways
in which we tend to overestimate the market value of the things we
own. It’s been called the investment effect. It might be because we
price in the positive feelings we have derived from owning the object
(we took such great family outings in that car) in ways that are
irrelevant to potential buyers. It may be that we experience the
parting with the object as a loss that prices in those good feelings
and it is well demonstrated that we have a tendency to avoid loss that
exceeds our desire for gains even at constant expected value. I’m not
sure Dan adds a lot new on this topic, although it is certainly a way
in which we evidence irrational consumer behavior, except an
experiment based on a rather peculiar basketball ticketing process at
Duke. None the less, this is useful stuff to be reminded of from time
to time.

I must admit that although one of my nephews is on faculty there, I
had not heard of Duke’s peculiar way of rationing basketball tickets
for important games. I won’t go through the whole thing hear – it’s a
pleasure left for the reader – but suffice it to say that it’s a multi-
day process that involves camping out and jumping through the odd hoop
and that process just gets you into a lottery for a ticket. Dan, who
did his Ph.D. there, and a colleague from INSEAD, contacted folks who
had gotten tickets and those who hadn’t and tried to arrange sales.
All had demonstrated the fervent desire to go to the game by
participating in the ritual described but, while those that had gotten
tickets said they would sell them for (on average) $2400, those who
hadn’t gotten them would only agree to pay (on average) $175.

This effect of ownership, even if it’s temporary (”FREE!! 10 day home
trial”, “return it without charge if you’re not satisfied”) or virtual
(how dare that idiot outbid me for my watch) is quite general.
Merchandisers use it to their advantage all the time. As with many of
these chapters, Dan’s point is, knowing that this effect is real,
examine your behavior when you get in these situations. So doing you
can avoid much frustration and avoid being manipulated into making
decisions that are not really in your best interest.

Chapter 8. Keeping Doors Open
Why Options Distract Us from Our Main Objective

I’m a big options fan. I like real options thinking and have seen it
used to generate real value in R&T environments. I was, therefore, not
wild when I read this title. Was there something fundamentally wrong
with my attachment to options? Well, let’s take a couple of famous
examples. The oldest comes from Sun Tsu in the world’s oldest job
application, “The Art of War,” written in the 6th century BC. I know
I’ve talked about this book before and I assure you I will talk about
it again. If you haven’t read it yet make it next on your list. Master
Tsu advises generals: “do not attack an enemy that has his back to a

and further
“do not thwart an enemy retreating home. If you surround the enemy,
leave an outlet; do not press an enemy that is cornered.

Such cornered foes are too formidable. Exploiting this same dynamic he
advises: Throw your soldiers into positions whence there is no escape,
and they will prefer death to flight. If they will face death, there
is nothing they may not achieve. Officers and men alike will put forth
their uttermost strength. Soldiers when in desperate straits lose the
sense of fear. If there is no place of refuge, they will stand firm.
If they are in hostile country, they will show a stubborn front. If
there is no help for it, they will fight hard.”

Indeed, Xiang Yu, in 210 BC, exploited this in Cortez and, doubtless,
many more. Having crossed the Yangtze, he burned his boats and had all
the cooking pots destroyed. Win or die; a clear message for the troops
and one that cleared their minds and free up assets from having to
protect those assets.

As always, Dan and some colleagues run some experiments on students.
They design several computer games in which players had 100 “clicks”
which they could use to choose one of three rooms and once in a room
click to get cash. Different rooms give different pay-offs and
generally people figured out pretty quickly which room paid the most
per click and then spent their time in that room. However, when the
game was changed such that rooms that hadn’t been visited in some
prescribed number of clicks disappeared, players would go back and
click on those rooms to keep them available even though it cost (on
average) 15% of their earnings.

This chapter makes the point that options can serve as distraction as
well as valuable alternatives. Olympic athletes are seldom concert
violinists. Mastery and focus often turn in better results than trying
to be all things to all people. My undergraduate honors advisor was,
and likely is still, a complete success as a chemist. When, as a
graduate student, I took his advanced organic synthesis course, I felt
like I was taken to the top of a tall mountain and shown the vast
landscape of chemical synthesis. He achieved that mastery as the
result of considerable focus. “George,” he said to me at one point,
“you should be spending 80% of your waking hours at the bench.”

This sort of behavior is contrary to much of what our culture offers
us today. Our environment bombards us with variety. You can know more
and more about more with just a few clicks of a mouse. Failure to be
well-rounded is viewed as a significant deficit. On the other hand,
the person who tries to do too many things can end up never doing any
one of them well enough to have impact. Like most things, of course,
there are two ways to get this wrong. Being monomaniacal may have its
benefits but it comes at a price. Having strong family relationships,
for example, can buffer you from the occasional bad days you may
experience at work.

There is another interesting aspect of the sometimes bewildering array
of choices that confronts us; a retreat to systems in which less
choice is allowed. The power and even ascendancy of authoritarian
regimes and rigid philosophical systems are sometimes viewed as
reactions to the world’s increasing complexity. Hardly a new idea,
“Escape from Freedom,” by the philosopher Eric Fromm is probably the
best treatment on the topic. However Dan has an interesting slant,
pointing out that increasing the complexity of a decision makes it
more likely that decision makers will rely on external (hence
manipulable) cues.

While it would be a mistake for us to fail to exploit options thinking
and the development of options for our business and personal lives,
trying to do too many things at once is a clear route to failure.

Chapter 9: The Effect of Expectations
Why The Mind Gets What It Expects

We all know that our expectations affect our experiences. Generally
however, since we are aware of this tendency we “smart people” think
we set that aside for the most part. In this chapter Dan describes a
number of experiments that he performed as well as a number of
experiments by others that point out just how subtle and persuasive
our expectations are.

Setting up shop in the “Muddy Charles,” the pub in MIT’s Walker
Memorial Building, he and collaborators started handing out free
samples of beer. Students were given samples of two types and then
asked to choose which of these they’d like a larger glass. The beers
started with the same brew but a few drops of balsamic vinegar were
added to one. (They actually started with Budweiser but some folks
“objected to calling Budweiser beer” so they switched to Sam Adams.)
They measured how many people ordered each of the samples and then
asked people to describe what they thought about the new beer. Some of
these folks were not told what the difference between the two beers
was, some were told about the vinegar before they tried it and some
were told after. Guess what happened. When they got the information
actually changed their rating of the experimental suds. Knowing it
contained vinegar beforehand changed their described experience when
doing the taste test.

There’s actually a lot more to this experiment and Dan presents a
number of other experiments including some employing functional MRI.
Here in a version of the classic Coke-v-Pepsi challenge it can be
demonstrated that at a brain activity level the experience of drinking
one as opposed to the other id modified by knowledge of which they
were drinking

By far the most interesting examples – and I really can’t bring myself
to spoil the fun you’ll have reading them – have to do with
stereotypes. Especially interesting are those dealing with groups to
whom several “conflicting” stereotypes can be applied. In these case
preconditioning the subjects with certain words chosen to “remind”
them of one or the other of these produced behavior that reflected the
provoked stereotype. You’ve just got to read this stuff trust me.

Chapter 10. The Power of Price
Why a 50 Cent Aspirin Can Do What a Penny Aspirin Can’t

We all know about the placebo effect; that wild and wonderful way in
which our mind affects our perception of, and in some cases our real
experience of the healing effects of one medication or the other. It’s
sort of an extension of the last chapter’s theme; the mind gets what
it expects. You’ll remember that Dan spent a long time in a hospital
burn unit recovering from a serious accident he’d had while training
for the IDF, well you won’t be surprised that he had a lot of time to
think about the placebo effect.

As part of his investigations into the perception of pain, as a newly
minted asst prof, he bought a vice and would crush people’s fingers in
it and ask them things like:

“How much did that hurt?”
“How much would I have to pay you to let me do that to you again?”

(You just can’t make this stuff up!) In this chapter he explores some
aspects of the economic side of the placebo effect. He has
experimenters pose as representatives from a drug company. They gave
people a series of electrical shocks of varying magnitude, asked them
about the pain they experienced. Next they were given a pain reliever,
well vitamin C actually, but they were told either that it was a new
and expensive one or a cheap one. When the shocks were repeated guess
what? Those who thought they were getting the high-priced stuff
reported that it worked pretty well, and much better than the folks
who got the cheap stuff. (Now let’s review what this means for the
spiraling costs of US health care.) By the way, the more recently the
folks had had experience with significant pain the better it worked.
As usual he did a number of experiments like this and I won’t spoil
you fun.

There are two sorts of implications he explores that are worth our
thought. First, how general is this phenomenon? It certainly applies
to food and drink, to cars to a whole lot of things. Does that mean
that we are manipulated into paying higher prices for goods that are
essentially equivalent to lower price alternatives? Would we be better
off if we brought this into our conscious mind as we decide whether
the most recent genes are worth it?

The next thing he brings up is really an ethical question. He cites
several examples where surgical procedures were found to produce no
better results than sham operations. A patient who thinks he or she
received one of these surgical procedure reports just as much benefit
as someone who actually had the procedure. While the medical community
wasn’t actually intending the procedures benefits to derive from the
placebo effect it turns out that’s exactly what happened. There is
also the less dramatic exploitation of the effect that many doctors
practice when they prescribe antibiotics for colds and sore throats,
the vast majority of which are viral. They prescribe, patients get
better and the offending microbe was not at all affected by the active
ingredient. It, of course, turns out, that in some instances at least,
people treated with placebos actually do get better faster than those
untreated. There will be some Nobels given out for figuring out
exactly how that works. So, the interesting ethical questions Dan
brings up are, knowing the placebo effect is real, should doctors use
in intentionally and if so how and when? Also if we want to protect
people from unnecessary surgery do we have an obligation to test
surgical procedures against sham surgery in humans?

Like I have said all along, this book is worth the time, even more for
the questions than for the answers.

Chapter 11: The Context of Our Character, Part 1
Why We Are Dishonest, and What We Can Do About It

Dan starts this chapter with some interesting observations. I haven’t
independently confirmed them but I’m willing to give him the benefit
of the doubt and assume they’re right.

Total loss due to robbery                                   $525M
Average loss per robbery                                $1,300
Total loss to robbery, burglary,
larceny-theft and auto theft                                 $16B
Workplace loss to theft and fraud                   $600B
Loss from fraudulent insurance claims            $24B
Underpayment of income tax (per IRS)         $350B
Fraudulent clothing returns to retail outlets    $16B

Do we think about the people who perpetrate these crimes differently?
In our most fundamentalist moments we’d say no. A theft is a theft.
But do we actually act that way as a society? Let’s change tacks. Does
the self concept of the guy or gal walking out of work with a package
of Post-It™ notes differ fundamentally from the folks speeding away
from the convenience store they’ve just knocked over? How about the
person who keeps the extra cash when they’ve been given too much
change? If we judge by how much attention and cash we pay to catch the
perpetrators and the answer seems clear. Does the amount of loss due
to the actions of people we do not generally think of as criminals
mean that many “honest” people cheat? Bring on the experiments!

Dan and a number of collaborators do a number of varieties of one
experimental theme using his favorite subjects, college students from
around the country. The basic outline of the experiment is as follows.
A control group is established by giving a group of students some
timed test (50 general information questions, 15 math problems,…) and,
allowing them no way to cheat, grade their papers paying them $0.10
per correct answer. The next group has to transfer their answers from
their work sheet to a grid on which the correct answers are
highlighted and they are to write at the top of the grid sheet how
many answers they got correct. The worksheet and the grid are handed
to the experimenter who them pays the student $0.10 for every correct
answer he or she claimed. Another group was treated the same as the
previous but then told to shred their worksheet and grid and then
simply tell the experimenter how many answers they had gotten right at
which point the experimenter paid them as before. A final group tested
as before, was told to shred their worksheet and grid and simply take
the correct amount of money from a jar containing about $100. Guess
what happened and write down your guess.

No really don’t look, guess first. The second experimental group,
which had handed in their work sheet and grid sheet, cheated by about
10%. How about the other groups? Have you got your guess recorded?

They cheated by about the same amount. Even when they could have
simply taken all the money the students cheated just a little. And it
wasn’t the case that there were a few bad apples that drove the
results. The means for the group shifted but the distribution remained
the same. Apparently we are pretty good at rationalizing small amounts
of dishonesty.

Now, same experiment (including the shredding of the work sheet and
the grid) but now the experimental groups are asked to do a little
memory test or given a verbal reminder before the test. One group was
asked to write down a list of 10 books they had read in high school,
another was asked to write down as many of the 10 commandments as they
could remember, a group at Princeton was told that this test was
governed by Princeton’s storied honor code, yet another was told that
the tests were governed by MIT’s honor code (there is, by the way, no
such thing). Have you guessed what happened?

In all of the groups asked to remember something that reminded them of
an ethical benchmark no one cheated. Now these are successful college
students at some of the best schools in the country so you’d hope
they’d had some underpinning in ethics, and of course there was little
at stake so we could expect different results in different groups and
among these groups in different contexts, nonetheless this experiment
is striking. Simply being recently reminded that there is a difference
between ethical and unethical conduct changed their behavior. Dan
draws the comparison with the codes of conduct to which professions of
varying sorts used to ascribe. He asserts that as the professional
societies and identities have become weaker forces in the practice of
their respective crafts, we have passed that boundary he talked about
earlier from the arena of social norms to that of market norms with a
concomitant cost to society.

Unsurprisingly there’s a lot more to this chapter and, as always, I do
not want to spoil the fun you’ll have when you read the book yourself.
But I think that there’s enough here to provoke discussion. If most
“good, honest” people cheat a little what does that say about society
as a whole and how might we actually promote a turn to more ethical
behavior, or has that die been cast?

Chapter 12: The Context of Our Character, Part 2
Why Dealing With Cash Makes Us More Honest

The fundamental finding Dan reports here is encapsulated in the title.
He finds that, in his experiments, people are less likely to steal
cash than they are to run off with non-monetary instruments. Again, he
cites a number of experiments, but the sense of the lot can be summed
up in just one. When he put 6 packs of Coke in MIT dorms they all
disappeared in 72 hours. When instead, he put 6 one dollar bills in
the same refrigerators they all survived. In his usual fashion he
explored just how close to case you had to be to see this effect. If
they were given tokens that you nearly instantly exchanged for cash
would it increase cheating (yes it turns out)?

This is one of his most broadly provocative points. If tokens increase
cheating, how about even more abstract instruments?
* How about credit cards – lots of cheating there
* How about the anonymity granted by the net – lots of cheating
* How about stock options – lots of back dating there
* How about cooking the books – lots of cheating there

It seems really likely that Jeff Skilling and Ken Lay would likely
never simply have mugged folks and taken their cash, but somehow
cooking the books was OK. There is clearly, at least for some folks, a
mechanism which allows the incremental dishonesty to creep in without
triggering our “If I do this I’ll be a bad person,” alarm.

On the whole I find this chapter a little depressing. It certainly
points out some things that, if they are truly extensible, should make
us have significant reservations about the increasing abstraction of
vessels of monetary exchange, a trend likely to continue. So I am left
at the end of this chapter with a dilemma I seldom faced in this book,
disquiet with no obvious remedy. I can more carefully examine my own
behavior and I can become more protective in my use of non-cash
instruments but the entire chapter begs for broader experimentation.
I’ll leave you with a quotation from HL Mencken. If you don’t know his
work, dabble some in it. It’s an excellent source for uncomfortable

“The difference between a moral man and a man of honor is that the
latter regrets a discreditable act, even when it has worked and he has
not been caught. “
– H. L. Mencken, ‘Prejudices: Fourth Series,’ 1924

Chapter 13: Beer and free lunches
What Is Behavioral Economics, And Where Are The Free Lunches?

There’s an old joke in economics – two economists are walking down the
street and they see a $20 bill on the ground. One begins to bend over
to reach for it, the other stops him saying, “If that were a real $20
bill someone would have already picked it up.”

OK – so there’s a lot of the standard model in a nutshell. It’s sort
of like that classic statement of the second law of thermodynamics,
“you can never win, you can, at best, break even.” There are several
more sets of experiments described in this chapter of course. These
focus on restaurants, people’s behavior in ordering food and beer (a
recurring theme) and their satisfaction with the outcomes. It turns
out that people order different things if they are the first or last
in a group to order. The orders previously given by group members
influence what the remaining members order. You can easily imagine at
least two ways that might happen, a drive toward conformity or a drive
toward displaying uniqueness, I’m not going to spoil your fun by
describing the experiments and the details of the results. Generally,
however, it turns out that you are likely to enjoy your selection more
if you make up your own mind and stick to it. This is, then, a source
of a free lunch. Having information about largely subliminal process
that influence your decision making can allow you to escape the traps
such processes help us fall into. So, order what you like and enjoy it
more. The extra enjoyment is free.

Indeed the real point of the majority of this fun book is just that:
don’t blindly believe that economic rationality prevails at all times.
Study real behavior, make the invisible processes visible to you and
stop being the tool of others – this is the real free lunch. Felix qui
potuit rerum cognoscere causas!

Dan Ariely
email : dan [at] predictablyirrational [dot] com / ariely [at] mit [dot] edu /
dandan [at] duke [dot] edu




RYSSDAL: Given our motives for revenge, is there a way that Congress
can shape a bill that’s going to make it acceptable to people whose
constituents really want to punish Wall Street?

ARIELY: Yes. So I think we need to include revenge in the bill. There
was discussion about capping CEO salaries, which I think went a small
way into revenge. But I think there are two ways to include revenge in
the bill. One way is to say every time we are going to nationalize
something, we are going to take the stock option of these people in
these banks, right? We will make them pay for nationalizing it. That’s
one approach. The second approach is to build into the system future
revenge. So another thing we can do is we can decide that the bill
will actually force us to create a new code of punishment for people
on Wall Street. And we have an opportunity here, with a meltdown
that’s so dramatic, that we feel that there is a need to go back and
try and reshape the whole system. And that might actually be very,
very useful in the long term.


by Daniel Kahneman

Many people think of economics as the discipline that deals with such
things as housing prices, recessions, trade and unemployment. This
view of economics is far too narrow. Economists and others who apply
the ideas of economics deal with most aspects of life. There are
economic approaches to sex and to crime, to political action and to
mass entertainment, to law, health care and education, and to the
acquisition and use of power. Economists bring to these topics a
unique set of intellectual tools, a clear conception of the forces
that drive human action, and a rigorous way of working out the social
implications of individual choices. Economists are also the
gatekeepers who control the flow of facts and ideas from the worlds of
social science and technology to the world of policy. The findings of
educators, epidemiologists and sociologists as well as the inventions
of scientists and engineers are almost always filtered through an
economic analysis before they are allowed to influence the decisions
of policy makers.

In performing their function as gatekeepers, economists do not only
apply the results of scientific investigation. They also bring to bear
their beliefs about human nature. In the past, these beliefs could be
summarized rather simply: people are self-interested and rational, and
markets work. The beliefs of many economists have become much more
nuanced in recent decades, and the approach that goes under the label
of “behavioral economics” is based on a rather different view of both
individuals and institutions. Behavioral economics is fortunate to
have a witty guru—Richard Thaler of the University of Chicago Business
School. (I stress this detail of his affiliation because the Economics
Department of the University of Chicago is the temple of the “rational-
agent model” that behavioral economists question.) Expanding on the
idea of bounded rationality that the polymath Herbert Simon formulated
long ago, Dick Thaler offered four tenets as the foundations of
behavioral economics:

Bounded rationality
Bounded selfishness
Bounded self-control
Bounded arbitrage

The first three bounds are reasonably self-evident and obviously based
on a plausible view of the psychology of the human agent. The fourth
tenet is an observation about the limited ability of the market to
exploit human folly and thereby to protect individual fools from their
mistakes. The combination of ideas is applicable to the whole range of
topics to which standard economic analysis has been applied—and at
least some of us believe that the improved realism of the assumption
yields better analysis and more useful policy recommendations.

Behavioral economics was influenced by psychology from its inception—
or perhaps more accurately, behavioral economists made friends with
psychologists, taught them some economics and learned some psychology
from them. The little economics I know I learned from Dick Thaler when
we worked together 25 years ago. It is somewhat embarrassing for a
psychologist to admit that there is an asymmetry between the two
disciplines: I cannot imagine a psychologist who could be counted as a
good economist without formal training in that discipline, but it
seems to be easier for economists to be good psychologists. This is
certainly the case for both Dick and Sendhil Mullainathan—they know a
great deal of what is going on in modern psychology, but more
importantly they have superb psychological intuition and are willing
to trust it.

Some of Dick Thaler’s most important ideas of recent years—especially
his elaboration of the role of default options and status quo bias—
have relied more on his flawless psychological sense than on actual
psychological research. I was slightly worried by that development,
fearing that behavioral economics might not need much input from
psychology anymore. But the recent work of Sendhil Mullainathan has
reassured me on this score as well as on many others. Sendhil belongs
to a new generation. He was Dick Thaler’s favorite student as an
undergraduate at Cornell, and his wonderful research on poverty is a
collaboration with a psychologist, Eldar Shafir, who is roughly my
son’s age. The psychology on which they draw is different from the
ideas that influenced Dick. In the mind of behavioral economists,
young and less young, the fusion of ideas from the two disciplines
yields a rich and exciting picture of decision making, in which a
basic premise—that the immediate context of decision making matters
more than you think—is put to work in novel ways.

I happened to be involved in an encounter that had quite a bit to do
with the birth of behavioral economics. More than twenty-five years
ago, Eric Wanner was about to become the President of the Russell Sage
Foundation—a post he has held with grace and distinction ever since.
Amos Tversky and I met Eric at a conference on Cognitive Science in
Rochester, where he invited us to have a beer and discuss his idea of
bringing together psychology and economics. He asked how a foundation
could help. We both remember my answer. I told him that this was not a
project on which it was possible to spend a lot of money honestly.
More importantly, I told him that it was futile to support
psychologists who wanted to influence economics. The people who needed
support were economists who were willing to be influenced. Indeed, the
first grant that the Russell Sage Foundation made in that area allowed
Dick Thaler to spend a year with me in Vancouver. This was 1983-1984,
which was a very good year for behavioral economics. As the Edge
Sonoma session amply demonstrated, we have come a long way since that
day in a Rochester bar.



Daniel Kahneman
email : kahneman [at] princeton [dot] edu

Sendhil Mullainathan
email : mullain [at] fas.harvard [dot] edu

Richard H. Thaler
email : richard.thaler [at] chicagogsb [dot] edu

Cass R. Sunstein
email : csunstei [at] law.harvard [dot] edu




“Libertarian Paternalism: Not an oxymoron. Libertarian paternalism is
a relatively weak, soft, and non-intrusive type of paternalism where
choices are not blocked, fenced off, or significantly burdened. A
philosophic approach to governance, public or private, to help homo
sapiens who want to make choices that improve their lives, without
infringing on the liberty of others. Addendum to skeptics: It is not
pledge for bigger government, just for better governance.”

Richard Thaler has led a revolution in the study of economics by
understanding the strange ways people behave with their money.
by Roger Lowenstein  /  11 February 2001

It is possible that Richard Thaler changed his mind about economic
theory and went on to challenge what had become a hopelessly dry and
out-of-touch discipline because, one day, when a few of his supposedly
rational colleagues were over at his house, he noticed that they were
unable to stop themselves from gorging on some cashew nuts he’d put
out. Then again, it could have been because a friend admitted to
Thaler that, although he mowed his own lawn to save $10, he would
never agree to cut the lawn next door in return for the same $10 or
even more. But the moment that sticks in Thaler’s mind occurred back
in the 1970’s, when he and another friend, a computer maven named Jeff
Lasky, decided to skip a basketball game in Rochester because of a
swirling snowstorm. “But if we had bought the tickets already, we’d
go,” Lasky noted. “True — and interesting,” Thaler replied.

Thaler began to make note of these episodes — anomalies, he called
them — and to chalk them up on his blackboard at the University of
Rochester, where he was a young, unheralded and untenured assistant
professor. Each of these stories was at odds with neoclassical
economics as it was taught in graduate schools; indeed, each was a
tiny subversion of the prevailing orthodoxy. According to accepted
economic theory, for instance, a person is always better off with more
rather than fewer choices. So why had Thaler’s colleagues roundly
thanked him for removing the tempting cashews from his living room?
The lawn example was even more troubling. Perhaps you dimly remember
from Economics 101 that unlovely term, “opportunity cost.” The idea,
as your pointy-headed prof vainly tried to persuade you, is that
forgoing a gain of $10 to mow a neighbor’s lawn “costs” just as much
as paying somebody else to mow your own. According to theory, you
either prefer the extra time or the extra money — it can’t be both.
And the basketball tickets refer to “sunk costs.” No sense going to
the health club just because we have paid our dues, right? After all,
the money is already paid — sunk. And yet, Thaler observed, we do.
People, in short, do not behave like the pointy heads say they should.

In the ordered world of economics, this rated as a heresy on the scale
of Galileo. According to the standard or neoclassical school
(essentially a 20th-century updating of Adam Smith), people, in their
economic lives, are everywhere and always rational decision makers;
those who aren’t either learn quickly or are punished by markets and
go broke. Among the implications of this view are that market prices
are always right and that people choose the right stocks, the right
career, the right level of savings — indeed, that they coolly adjust
their rates of spending with each fluctuation in their portfolios, as
though every consumer were a mathematician, too. Since the 1970’s,
this orthodoxy has totally dominated the top universities, not to
mention the Nobel Prize committee.

Thaler spearheaded a simple but devastating dissent. Rejecting the
narrow, mechanical homo economicus that serves as a basis for
neoclassical theory, Thaler proposed that most people actually behave
like . . . people! They are prone to error, irrationality and emotion,
and they act in ways not always consistent with maximizing their own
financial well being. So serious was Thaler’s challenge that Merton
Miller, the late Nobelist and neoclassical deity, refused to talk to
him; Thaler’s own thesis adviser lamented that he had wasted a
promising career on trivialities like cashews. Most economists simply
ignored him.

But the anomalous behaviors documented by Thaler and a band of fellow
dissenters, including Yale’s Robert Shiller and Harvard’s Lawrence
Summers, Clinton’s last treasury secretary, have grown too numerous to
ignore. And the renegades, though still a minority, have embarked on a
second stage: an attempt to show that anomalies fall into recognizable
and predictable patterns. The hope is that by illuminating these
patterns, behavioral economics, as it has come to be called, will
yield a new understanding of the economy and markets. Behaviorism,
says Daniel McFadden, the recent Nobel laureate, “is a fundamental re-
examination of the field. It’s where gravity is pulling economic

Thaler, after years of being shunned, is now a popular, highly paid
professor at the University of Chicago Graduate School of Business,
the traditional nerve center of neoclassicism. His increasing
following is owed in no small part to the fact that behaviorism,
unlike so much of economics, is fun. Although prewar economists like
John Maynard Keynes were literary artists, most writing in the field
since the 70’s has been obtuse and highly mathematical, all but
inaccessible to the lay person. By contrast, Thaler’s papers are rich
with intuitive gems drawn from sports, business and everyday life. In
one paper, he pointed out that people go across town to save $10 on a
clock radio but not to save $10 on a large-screen TV. It’s a seemingly
obvious point — and also a direct contradiction of rationalist

Thaler loves pointing out that not even economics professors are as
rational as the guys in their models. For instance, a bottle of wine
that sells for $50 might seem far too expensive to buy for a casual
dinner at home. But if you already owned that bottle of wine, having
purchased it earlier for far less, you’d be more likely to uncork it
for the same meal. To an economist (a sober one, anyway) this makes no
sense. But Thaler culled the anecdote from Richard Rosett, a prominent

A thickset man of 55, Thaler has a sharp wit and a voluble ego. Many
assume that his years in the academic wilderness have made him
defensive; Thaler denies it. “The last thing I want to do is to sound
embittered about having to struggle,” he told me, easing his Audi
around Lake Michigan toward the Gothic stone campus. But Thaler
doesn’t so much debate opponents; he skewers them. The British
economist Ken Binmore once proclaimed at a seminar that people evolve
toward rationality by learning from mistakes. Thaler retorted that
people may learn how to shop for groceries sensibly because they do it
every week, but the big decisions — marriage, career, retirement —
don’t come up that often. So Binmore’s highbrow theories, he
concluded, were good for “buying milk.”

I met Thaler two days after the election, and he was already
predicting that the country would be willing to accept Bush as the
winner, because “people have a bias toward the status quo.” I asked
how “status-quo bias” affects economics, and Thaler observed that
workers save more when they are automatically enrolled in savings
programs than when they have to choose to participate by, say,
returning a form. Standard theory holds that workers would make the
most rational decision regardless.

Savings is an area where Thaler thinks he can have a big impact. Along
with Shlomo Benartzi, a collaborator at U.C.L.A., Thaler cooked up a
plan called Save More Tomorrow. The idea is to persuade employees to
commit a big share of future salary increases to their retirement
accounts. People find it less painful to make future concessions
because pain deferred is, to an extent, pain denied. Therein lies the
logic for New Year’s resolutions. Save More Tomorrow was tried with a
Chicago company, and workers tripled their savings within a year and a
half — an astounding result. “This is big stuff,” Thaler says. He is
shopping the plan around to other employers and predicts that
eventually it could help raise the country’s low savings rate.

Though Thaler, who comes across as a middling, Robert Rubin-style
Democrat, plays down the connection, such results could provide
ammunition to liberals who think government bashing has gone too far.
Since the Reagan era, a mantra for office seekers is that people know
what is best for themselves. Generally, yes; but what if not always,
and what if they err in predictable ways? For instance, Thaler has
found that the number of options on a 401(k) menu can affect the
employees’ selections. Those with a choice of a stock fund and bond
fund tend to invest half in each. Those with a choice of three stock
funds and one bond fund are likely to sprinkle an equal amount of
their savings in each, and thus put 75 percent of the total in stocks.
Such behavior illustrates “framing” — decisions being affected by how
choices are positioned. Political pollsters and advertisers have known
this for years, though economists are just coming around.

Framing has big implications for the debate on privatizing Social
Security. Neoclassicists say that people should manage their own
retirement accounts, and that the more choices they have the better.
Thalerites are not so sure. “If Thaler is right, it makes the current
dogmatic antipaternalism really doubtful,” says Cass Sunstein, a
prominent legal scholar at the University of Chicago.

Thaler, who grew up in Chatham, N.J., the son of an actuary, wrote his

doctoral thesis at the University of Rochester on the economic “worth”
of a human life (public planners tackle this morbid theme frequently,
for instance, in determining speed limits). Thaler conceived a clever
method of calculation: measuring the difference in pay between life-
threatening jobs like logging and safer lines of work. He came up with
a figure of $200 a year (in 1967 dollars) for each 1-in-1,000 chance
of dying.

Sherwin Rosen, his thesis adviser, loved it. Thaler did not. He had
been asking friends about it, and most insisted that they would not
accept a 1-in-1,000 mortality risk for anything less than a million
dollars. Paradoxically, the same friends said they would not be
willing to forgo any income to eliminate the risks that their jobs
already entailed. Thaler decided that rather than rationally pricing
mortality, people had a cognitive disconnect; they put a premium on
new risks and casually discounted familiar ones.

For a while, Thaler regarded such anomalies as mere cocktail-party
fodder. But in 1976 he happened upon the work of two psychologists,
Daniel Kahneman and the now-deceased Amos Tversky, who had been
studying many of the same behaviors as Thaler. The two had noticed a
key pattern: people are more concerned with changes in wealth than
with their absolute level — a violation of standard theory that
explained many of Thaler’s anomalies. Moreover, most people are “loss
averse,” meaning they experience more pain from losses than pleasure
from gains. This explains why investors hate to sell losers. For
Thaler, their work was an epiphany. He wrote to Tversky, who plainly
encouraged him. “He took me seriously,” Thaler recalled, “and because
of that, I started taking it seriously.”

Thaler began designing experiments to test his ideas. In one, Thaler
told lab subjects to imagine they are stranded on a beach on a
sweltering day and that someone offers to go for their favorite brand
of beer. How much would they be willing to pay? Invariably, Thaler
found, subjects agree to pay more if they are told that the beer is
being purchased from an exclusive hotel rather than from a rundown
grocery. It strikes them as unfair to pay the same. This violates the
bedrock principle that one Budweiser is worth the same as another, and
it suggests that people care as much about being treated fairly as
they do about the actual value of what they’re paying for. Although
“fairness” is generally ignored by neoclassicists, it’s probably a
reason why companies do not lower salaries when they encounter tough
times — perversely, laying off workers is considered more fair.

Thaler’s first paper on anomalies was rejected by the leading economic
journals. But in 1980, a new publication, The Journal of Economic
Behavior and Organization, was desperate for copy, and Thaler’s
“Toward a Positive Theory of Consumer Choice” saw the light of day. “I
didn’t have any data,” he admits. “It was stuff that was just true.”

The response from fellow economists was zero. But the article
eventually caught the eye of Eric Wanner, a psychologist at the Alfred
P. Sloan Foundation in New York. Wanner was itching to get economists
and psychologists talking to one another, and Thaler took the bait.
“He was the first economist who thought hard about the implications
for economics,” Wanner says. “The reaction of mainstream economists
was defensive and hostile. They considered it an attack — an
apostasy.” Wanner, who became president of the Russell Sage
Foundation, started financing behavioral economics, and Thaler became
the informal leader, organizing seminars and summer workshops. In
effect, he turned an idea into a movement. “Dick was like a taxonomist
who goes out and collects embarrassing specimens,” Wanner says. “He
learned that to get anyone to pay attention to him he had to develop a
portfolio of facts that he could be entertaining about and that
economists couldn’t sweep under the rug.”

Thaler’s most original contribution was “mental accounting” — an
extension of Kahneman and Tversky’s “framing” principle. “Framing”
says the positioning of choices prejudices the outcome. “Mental
accounting” says people draw their own frames, and that where they
place the boundaries subtly affects their decisions. For instance, a
poker player who accounts for each day separately may become bolder at
the end of a winning night because he feels he is playing with “house
money.” If he accounted for each hand separately, he would play the
first and last hands the same.

Most people sort their money into accounts like “current income” and
“savings” and justify different expenditures from each. They’ll gladly
blow their winnings from the office football pool, a “frivolous”
account, even while scrupulously salting away every penny of their

Thaler and a trio of colleagues went on to document that cabdrivers
stop working for the day when they reach a target level of income.
(Each day’s “account” is separate.) This means that — quite
nonsensically — they work shorter hours on more lucrative days, like
when it’s raining, and longer hours on days when fares are scarce! In
a sense, investors who pay attention to short-term fluctuations are
like those cabbies; if they toted up their stocks less frequently,
they would be better investors. Thaler went so far as to suggest to an
audience at Stanford that investors should be barred from seeing their
portfolios more than once every five years.

Such irreverence reinforced the view among economists that Thaler
could be safely ignored. His anecdotes were fuzzy science, they said,
and examples like the cabbies were easy pickings. Since there is no
way for a third party to profit from a cabbie’s mistake, it’s not
surprising that he would make one. Thaler knew the criticism had
merit, and that to be taken seriously, he had to demonstrate
irrationalities in financial markets, which are the purest embodiment
of neoclassicism. In the markets, one person’s bad decision can be
offset by someone else’s smart one. Across the markets, rationality
should reign.

Thaler set out to prove that it did not. His first effort, a 1985
paper with Werner De Bondt, his doctoral student, showed that stocks
tend to revert to the mean — that is, stocks that have outperformed
for a sustained period are likely to lag in the future and vice versa.
This was a finding that Chicago School types couldn’t ignore —
according to their theory, no pattern can be sustained, since if it
did, canny traders would try to profit from it, correcting prices
until the pattern disappeared.

Then, in 1987, Thaler was hired to write a regular Anomalies column
for a new economics journal, giving him a widespread audience among
his peers. That same year, the stock market crashed 23 percent on a
single day. Thaler could hardly have imagined better proof that the
market was not, well, perfectly rational. More economists began to
mine the data, and by the 90’s there was a rich literature of market
anomalies, documenting, for example, that people can consistently make
money on stocks that trade at low multiples of earnings, or on
companies that signal changes by doing things like hiking dividends.
Documenting anomalies became a popular pastime from Berkeley to

Thaler still has plenty of critics. The harshest one is right upstairs
from his office at Chicago, the curmudgeonly Eugene Fama, a longtime
advocate of the efficient-market school. “What Thaler does is
basically a curiosity item,” Fama snipes. “Would you be surprised that
every shopper doesn’t shop at the lowest prices? Not really. Does that
mean that prices aren’t competitive?”

Thaler periodically invites Fama in to his class to present the other
side, but Fama has not returned the gesture and, indeed, sounds bitter
that behavioral finance is getting so much attention. “One question
that occurs to me,” Fama says, “is, ‘How did some of this stuff ever
get published?”‘ The objection raised most often, from Fama and
others, is that if Thaler is right and the market is so screwy, why
wouldn’t more fund managers be able to beat it? A variation of this
theme is that if behavioral economics, for all its intuitive appeal,
can’t help people make money, what good is it?

Thaler, actually, is a director in a California money management firm,
Fuller & Thaler Asset Management, which, according to figures it
provided, has been beating the market handily since 1992. The firm
tries to exploit various behavioral patterns, like “categorization”:
when Lucent Technologies was riding high, people categorized it as a
“good stock” and mentally coded news about it in a favorable way.
Lately, Lucent has become a “bad stock.” But Thaler, who does not get
involved in picking stocks, stops short of suggesting that investors
versed in his research can beat the market. Mispricings that spring
from anomalies are hard to spot, he says, particularly when the people
looking for them are prone to their own behavioral quirks.

If this sounds muted, it may be because Thaler is ready to declare
victory and join the establishment. The neoclassical model, he admits,
is a fine starting point; it’s misleading only when regarded as a
perfect or all-encompassing description. People aren’t crazy, he adds,
but their rationality is “bounded” by the tendencies that Kahneman,
Tversky, himself and others have studied. What he hopes is that a
future generation will resolve the schism by building behavioral
tendencies into a new, more flexible model.

For now, Thaler is still looking for new miniature applications
wherever he can find them, like on the basketball court recently.
Thaler studied games in which a team trails by 2 points, with time
left for just one shot. What to go for, 2 points or 3? A 2-point shot
succeeds about half the time, a 3-pointer about 33 percent of the
time. But since a 2-point basket would only tie the game (and force an
overtime, in which the team has a 50-50 chance of winning), going for
a 3-pointer is a superior strategy. Still, most coaches go for 2. Why?
Because it lowers the risk of sudden loss. Coaches, like the rest of
us, do more to avoid losing than they do to win. You won’t find an
explanation for that in the mechanical homo economicus of theory. But
it has everything to do with folks Thaler thinks are much more
relevant to the economy — Homo sapiens.

From the archive, originally posted by: [ spectre ]



AMY GOODMAN: I wanted to play a clip of Sergio Vieira de Mello. It was
September 2002. I was outside the United Nations in New York during
the flag-raising ceremony celebrating East Timor’s independence from
Indonesia, and I asked him about his views on the chance of a US
invasion of Iraq.

SERGIO VIEIRA DE MELLO: In any conflict, we are concerned that
civilian populations should be spared, that every effort must be made
in any war, in any internal conflict, never to target civilians. And
should a war erupt in Iraq, I believe the Iraqi people don’t deserve
more suffering. They have suffered enough.

AMY GOODMAN: Of course, he would then die in Iraq as a result of the
truck bombing.

SAMANTHA POWER: Yeah. And One of the untold stories and the
devastating parts of this book and the last four years of reporting
the book is to realize he was actually alive for three-and-a-half
hours under the rubble.

And here’s something, that despite predicating the war on a link
between Saddam Hussein and terrorism, a link between Saddam Hussein
and al-Qaeda and 9/11, as Bush did, there was no preparedness done to
respond to terrorist attacks in Iraq. In other words, if you’re going
to predicate the war on a link with terrorism, you would think that
operationally you would prepare your troops to deal with al-Qaeda
attacks on civilian targets. No preparation whatsoever.

So, as Sergio, this person who’s given his life to trying to enhance
dignity, you know, and trying to mend broken places, effectively died
under the rubble like a refugee, the troops–heroic individual acts by
individual Americans who just ran to the scene and tried to improvise,
but ultimately, when it can to lifting the rubble from over him, a
lady’s handbag was used, literally one of those basket handbags that
had been plucked out of one of the offices. There were no stretchers,
so they had to use curtains from the Canal Hotel windows and a curtain
rope as a kind of amateur pulley system. So, the most powerful
military in the history of mankind is reduced to a woman’s handbag, a
curtain rope and a curtain to try to save the most valuable civil
servant that the UN has ever offered.


Samantha Power
phone: 617-495-3140
email : samantha_power [at] ksg [dot] harvard [dot] edu

Samantha Power is the Anna Lindh Professor of Practice of Global
Leadership and Public Policy, based at the Carr Center for Human
Rights Policy, where she was the founding executive director
[1998-2002]. She is the recent author of Chasing the Flame: Sergio
Vieira de Mello and the Fight to Save the World (Penguin Press, 2008),
a biography of the UN envoy killed by a suicide bomber in Iraq in
2003. Her book “A Problem from Hell”: America and the Age of Genocide
(New Republic Books) was awarded the 2003 Pulitzer Prize for general
nonfiction, the 2003 National Book Critics Circle Award for general
nonfiction, and the Council on Foreign Relations’ Arthur Ross Prize
for the best book in U.S. foreign policy. Power’s New Yorker article
on the horrors in Darfur, Sudan, won the 2005 National Magazine Award
for best reporting. In 2007, Power became a foreign policy columnist
at Time magazine. From 1993 to 1996 she covered the wars in the former
Yugoslavia as a reporter for the U.S. News and World Report, the
Boston Globe, and The New Republic. She remains a working journalist,
reporting from such places as Burundi, East Timor, Kosovo, Rwanda,
Sudan, and Zimbabwe, and contributing to the Atlantic Monthly, The New
Yorker and The New York Review of Books. Power is the editor, with
Graham Allison, of Realizing Human Rights: Moving from Inspiration to
Impact. A graduate of Yale University and Harvard Law School, she
moved to the United States from Ireland at the age of nine. She spent
2005 to 2006 working in the office of Senator Barack Obama.



SAMANTHA POWER: But I’ve never thought about going into government,
never thought about getting into politics. And when I met Obama in
2005 just actually at a meeting to talk about how to fix American
foreign policy, he read A Problem from Hell and just wanted to discuss
what the components of a tough, smart and humane foreign policy that
would be not just a critique of Bush, but an alternative, would be,
and we were supposed to meet for an hour, and an hour gave ways to a
second hour and a third hour and a fourth. As we entered our fourth
hour, I heard myself saying, “Why don’t I quit my job at Harvard and
come and intern in your office?” And so, I’ve been blown away by him
from start to finish. I don’t have any aspiration to go into
government, but I do–I would like to do anything I can going forward
to help Obama. So if that means going into government, I suppose
that’s what it’s going to require, but believe me, he–it’s not obvious
to me that that would be something he would want. But, you know, I
think if we’re all talking about how we need to share the sacrifice
and respond to the call to service, it would be a little hypocritical
to continue to sound off in my column and write books and so forth.
And I think you sort of have to put your money where your mouth is at
some point. So–

AMY GOODMAN: So that’s a yes?

SAMANTHA POWER: It’s a yes to a question that’s never been asked to
me, never would be asked, I suppose.


Obama’s Inner Circle  /  February 21, 2008

Gregory Craig: The lawyer who played a leading role in the defense
team for President Clinton’s impeachment is a newcomer to foreign
policy. At the end of the Clinton administration, he served as the
director of policy planning at the State Department.

Richard Danzig: A Yale-trained lawyer, Rhodes scholar, and secretary
of the Navy for President Clinton, Mr. Danzig serves as one of Senator
Obama’s chief advisers on military affairs.

Scott Gration: A retired Air Force major general and fluent Swahili
speaker, General Gration met Senator Obama on a trip to Africa and the
two have been in close touch ever since. General Gration flew missions
as a command pilot in Operation Iraqi Freedom, where he served as
commander of Task Force West.

Anthony Lake: President Clinton’s first national security adviser is
the most senior man on the Obama campaign’s foreign policy team. Mr.
Lake has been criticized by Samantha Power for his inaction on
preventing genocide in Rwanda and slow reaction to the Serb-led
massacres in Bosnia during his first term. Mr. Lake is the highest
ranking Clinton administration official working for Senator Obama.

Denis McDonough: A former legislative aide to Senator Daschle, Mr.
McDonough is the Obama campaign’s “point guard” on foreign policy, as
some campaign staffers call him.

Samantha Power: A journalist and a professor at Harvard’s Kennedy
School, Ms. Power is the author of “A Problem From Hell,” a book that
examines the problem of genocide from the perspective of international
law. She became Senator Obama’s first foreign affairs tutor and worked
on his staff in 2005.

Ben Rhodes: A 30-year-old wunderkind, Mr. Rhodes was one of the lead
staff writers for the Iraq Study Group recommendations issued at the
end of 2006 that encouraged engagement with Syria and Iran to end the
war in Iraq. He is also a coauthor of Lee Hamilton’s and Thomas Kean’s
memoir of the commission to investigate September 11. Mr. Rhodes
serves as the chief speechwriter on foreign policy.

Susan Rice: A senior staffer on President Clinton’s national security
council who served as assistant secretary of State for African
affairs, Ms. Rice has been an outspoken foe of the Sudanese regime for
the last ten years. At the end of the Clinton administration she gave
a press conference in southern Sudan and accused the Sudanese regime
of allowing a new slave trade. In 2004, she first endorsed Howard
Dean, but ended up as a senior adviser for Senator Kerry’s campaign.

Daniel Shapiro: A senior adviser on Middle East affairs, Mr. Shapiro
is a long time Democratic operative who worked for four years for
Senator Bill Nelson, a Democrat from Florida. In that capacity, he
played a role in sponsoring some hawkish legislation such as the Syria
Accountability Act and working to list Hezbollah’s satellite
television station, al-Manar, as a foreign terrorist organization.
Also, Mr. Shapiro also worked briefly for President Clinton’s national
security council.



Obama’s Brain Trust Taking Shape
BY Eli Lake  /  February 21, 2008

WASHINGTON — When it comes to foreign affairs, Senator Obama’s inner
circle of advisers includes a Swahili-speaking Air Force general he
met on a trip to Africa; a 30-year-old speechwriter who helped draft
the final report from the bipartisan Iraq Study Group, and President
Clinton’s first national security adviser, who in 2005 converted to
Judaism under the tutelage of the Navy’s chief Jewish chaplain.

Those advisers in order are Scott Gration, Ben Rhodes, and Anthony
Lake. They are part of a nine-person team, in contact every day, often
by e-mail. The team develops policy positions, clears language for use
in comments to the press, and prepares the Democratic candidate who
has won all the primaries since Super Tuesday for a dangerous world
and a global war.

Who advises Mr. Obama and whom the candidate would appoint to key
foreign policy posts if elected president has raged as the topic of
intense speculation on the Internet and through often anonymous e-
mails warning Jewish voters that Mr. Obama’s team may be neutral or
indeed hostile to Israel.

In a series of interviews with the campaign’s foreign policy advisers
and supporters, as well as critics, the national security team that
emerges around Mr. Obama is one that is in the mainstream of the
Democratic Party. The senator’s advisers favor a withdrawal from Iraq
and see it as a distraction from the wider war on Al Qaeda; they have
developed a detailed policy on how to exit the country. The campaign
favors high-level diplomatic engagement with Syria and Iran, but in
the context of changing the behavior of these regimes. And the foreign
policy team, like the candidate, does not support pressuring Israel
into negotiations with Hamas.

The nine-member team funnels input to Denis McDonough, an Obama
campaign staff member who briefs the candidate. A broader group of 250
advisers are divided into groups dealing with the Middle East, Latin
America, Africa, South Asia, East Asia, Russia-Europe, defense,
veterans, counterterrorism, democracy and development, and
multilateral institutions. On average each of these groups has 20
people. The Obama campaign has declined to release the names of all
the participants, saying that some of them are volunteering their time
while serving in jobs at government agencies and nonprofits that don’t
want to be publicly associated with a partisan political campaign.

One reason why some of the pro-Israel community have been comfortable
with Mr. Obama’s stance is the presence of Daniel Shapiro, a former
deputy chief of staff to Senator Bill Nelson, a Democrat from Florida.
Mr. Shapiro, who leads the Middle East group, spearheaded efforts in
Congress to designate al Manar, the satellite television channel for
Hezbollah, as a foreign terrorist organization. He sends his children
to the Jewish Primary Day School in Washington, D.C.

The lead American negotiator during the Oslo peace process, Ambassador
Dennis Ross, who has provided advice to Mr. Obama’s campaign but does
not consider himself to be an adviser, said he saw no difference on
Israel policy between Senator Clinton and Senator Obama.

Mr. Obama has not pledged to move the American embassy in Israel to
Jerusalem as soon as he takes office, a promise made by every major
candidate for president since Ronald Reagan in 1980, and a promise
broken by every president since the Reagan administration. And the
campaign’s wider circle includes two people, a former national
security adviser to President Carter, Zbigniew Brzezinski, and a
former President Clinton aide, Robert Malley, who have come under
wider scrutiny. The campaign says the candidate has not spoken in the
past four months with Mr. Brzezinski, who led a delegation in the
Middle East that met with President Assad of Syria. As for Mr. Malley,
the campaign says he is not a formal adviser, but has provided advice.

Another adviser who has come under scrutiny in recent weeks is
Samantha Power, a professor at Harvard University and an expert in
genocide and international law. Ms. Power was one of Mr. Obama’s first
foreign policy tutors when he came to the Senate in 2005, where she
began volunteering in his office after a meeting at a Washington
steakhouse. The campaign has called her a foreign policy adviser,
though not an adviser specifically on the Middle East.

Commentary Magazine, the National Review, and the American Thinker
have run critical blog posts about Ms. Power for series of comments
she has made regarding Israel.

For example, on May 30, 2007, Ms. Power was quoted in an interview
posted on the Kennedy School Web site as saying, “Another longstanding
foreign policy flaw is the degree to which special interests dictate
the way in which the ‘national interest’ as a whole is defined and
pursued. Look at the degree to which Halliburton and several of the
private security and contracting firms invested in the 2004 political
campaigns and received very lucrative contracts in the aftermath of
the U.S. takeover of Iraq. Also, America’s important historic
relationship with Israel has often led foreign policy decision-makers
to defer reflexively to Israeli security assessments, and to replicate
Israeli tactics, which, as the war in Lebanon last summer
demonstrated, can turn out to be counter-productive.”

In an interview yesterday, Ms. Power said, “This quote is taken out of
context. I was talking about the way Halliburton skewed U.S. decision-
making on the ground in Iraq. I have never suggested and do not
believe that the U.S. went to war in Iraq owing to Israeli pressure or

Ms. Power also said that she did not believe it was possible to send
American forces to Israel and the Palestinian territories without the
consent of both parties.

As for the strategic understanding of the American-Israeli
relationship, one of the campaign’s most senior advisers, Anthony
Lake, said he saw the two countries as sharing a common enemy. “You
can analytically make distinctions among them. Both Hezbollah and
Hamas are more focused on Israel than the United States. They all have
different agendas, but they all use terrorism and they all look at the
United States as their enemies too,” he said.

The approach of the Obama campaign hews closely to the recommendations
of the Baker-Hamilton report, co-authored by Ben Rhodes, Mr. Obama’s
30-year old foreign-policy speechwriter. The Baker-Hamilton report
called for engaging the Iranians and Syrians and winding down American
combat operations in Iraq, though it also endorsed a temporary surge
to enhance security. President Bush and Senator McCain both rejected
the main recommendations of the report, which they saw as a way to
manage defeat.

Mr. Lake said that he saw advantages to entering discussions with
Syria in part to break its “unnatural alliance” with Iran. “The Bush
administration’s doctrine of refusing to talk or insisting the other
side has to make all the concessions before they start talking with
you, is naïve,” he said.

The prospect that President Obama would seek discussions with Iran
worries some observers. A former Israeli ambassador to America, Daniel
Ayalon, said in a telephone interview, “What worries me, I have looked
into his position papers and all of that. He describes the ayatollah
regime as a Hitler-like regime. I think he is very right to see it as
a Hitler-like regime. If he sees it this way, why would he negotiate
with a Hitler type regime?”

Mr. Lake said in response, “I would argue what is important here are
results, for the sake of our security and Israel’s security. You don’t
achieve them by posturing. I have utter confidence — and I have been
in many negotiations — in Barack Obama’s ability to be a very, very
tough negotiator.”

A supporter of Mr. Obama’s, the editor in chief of the New Republic,
Martin Peretz, yesterday chalked up concerns about the senator’s
foreign policy with concerns about the Democratic Party. “The
weaknesses of the Obama foreign policy advisory team are a result of a
contagion in the Democratic party itself,” he said. “It is not just a
failure of understanding about Israel’s predicament, but a failure of
understanding about the career of freedom in the world.”

On just the question of Mr. Obama’s support for Israel, however, the
president of the American Israel Public Affairs Committee, Howard
Friedman, minimized any differences between the candidates. “All of
the leading candidates, Senators Clinton, Obama, and McCain, and
Governor Huckabee, have demonstrated their support for a strong U.S.-
Israel relationship,” Mr. Friedman said.

The rabbi of a synagogue across the street from the Obama family
residence in Hyde Park, Chicago, Arnold Jacob Wolf, said that the
senator was in fact too hawkish on Israel. “In my opinion he has been
too strong. I belong to the Peace Now group and he doesn’t. He is
defensive of Israel in ways I wouldn’t be, mostly the occupation,” the
rabbi, who says he has known Mr. Obama for 10 years, said.



Meet Obama’s ‘Tenacious,’ ‘Take Charge’ Dr. Rice
BY Russell Berman  /  January 28, 2008

WASHINGTON — “Our Dr. Rice” is the friendly moniker Democrats in the
foreign policy community often bestow on Susan Rice.

The reference to the Secretary Rice now running the State Department
is usually made in jest, but the comparison could carry significantly
more weight if Senator Obama, who on Saturday won the South Carolina
primary and today is poised to win the endorsement of Senator Kennedy,
becomes America’s next president.

As a senior foreign policy adviser to Mr. Obama, Susan Rice, 43, has
taken a leading role in helping to shape the freshman Illinois
senator’s vision for the world, building on a bond forged in part by
their shared — and outspoken — opposition to the war in Iraq.

An assistant secretary of state under President Clinton, Ms. Rice also
served as a senior adviser on the Kerry-Edwards campaign in 2004, and
she is likely to be on the short list for a top position in an Obama
administration, perhaps in the same role Condoleezza Rice served
during President Bush’s first term: national security adviser.

The Rices are not related, but as two prominent African American women
in a field long dominated by white men, the comparison is as natural
as it is superficial.

“We thought our Dr. Rice was a lot more sensible than their Dr. Rice,”
quipped James Rubin, a former State department spokesman who worked
with Susan Rice on the Kerry campaign but who is now an informal
adviser to Senator Clinton. Susan Rice said she has seen Secretary
Rice occasionally over the years but does not know her well. They
share a link to Stanford University — Susan Rice studied there as an
undergraduate in the 1980s while Condoleezza Rice taught as a
professor. Like Mr. Obama, Ms. Rice has long been a fierce critic of
the Bush administration’s foreign policy, and she does not look to
Secretary Rice as a role model.

“I don’t select role models on the basis of race and gender,” she said
in a telephone interview. She praised the two previous secretaries of
state, Madeleine Albright and Colin Powell, but she said the jury was
still out on Secretary Rice’s tenure.

Susan Rice grew up in Washington, D.C., the daughter of an economist
who served as a governor of the Federal Reserve, Emmett Rice, and an
education policy scholar, Lois Rice. She won a Rhodes scholarship and
later earned a doctorate in international relations from Oxford
University after graduating from Stanford in 1986. Ms. Rice joined the
Clinton White House in 1993 and rose quickly. Within two years she was
a senior director for African affairs on the National Security
Council. In 1997, President Clinton appointed her assistant secretary
of state for Africa, overseeing more than 40 countries and 5,000
foreign service officials.

She first met Mr. Obama when he was a Senate candidate in 2004, and
she became a resource and adviser for him the following year when he
took a seat on the Foreign Relations Committee. The two discussed a
range of issues, from Iraq to nuclear non-proliferation to

“I was attracted to him in the very beginning as someone who was
extraordinarily intelligent, thoughtful, and had a remarkably broad
and deep grasp of the key foreign policy challenges of the day,” she
said. Ms. Rice said she was drawn to him in part because of his early
and vocal opposition to the Iraq war. She had also spoken out on the
war before the American invasion, and she said she respected Mr. Obama
for making “the same unpopular choice I had made,” despite what she
described as a “huge amount of pressure in Washington to go along with
or support the war.”

Since the end of the Clinton administration, Ms. Rice has written
often about a range of issues, and particularly the genocide in
Darfur. She has pushed a much more aggressive American position on
Sudan, including the possible use of military force in 2005 and 2006.
She has backed off that position to some extent, saying efforts should
now be focused on beefing up and deploying a joint United Nations-
African Union peacekeeping force, which the Sudanese government has
resisted. “I think the challenge is somewhat different today, and the
prescription at the moment is somewhat different,” she said.

As one of several former Clinton administration officials who have
decamped to Mr. Obama, Ms. Rice joins a former national security
adviser to President Clinton, Anthony Lake, in the Illinois senator’s
inner circle of foreign policy advisers. She characterized the move as
a relatively easy decision, given the similarity in their policy views
and the fact that she had gotten to know him well while she had had
little contact with the Clintons in recent years.

“Supporting Senator Obama was a clear choice for me,” she said, “but
it was never a choice against Senator Clinton or President Clinton,
whom I have long respected.”

Still, she has not held back in criticizing Mrs. Clinton during the
campaign, and a few of her former colleagues privately seethed at
comments she made minimizing the New York senator’s role in foreign
policy as first lady.

In the interview, Ms. Rice said Mr. Obama had offered a more
substantive foreign policy platform than Mrs. Clinton, who she said
had “revealed relatively little” about her approach to foreign policy
and national security during the campaign. Citing Mrs. Clinton’s
article in the journal Foreign Affairs, she said Mr. Obama’s vision
was more forward-looking and, in a message that has emerged as a
dominant theme in the campaign, that Mrs. Clinton’s goal of
“restoring” American power was rooted in the past.

“If you read that article, it’s hard to discern a vision of a new
American leadership beyond just getting out from under the Bush
years,” Ms. Rice said. Associates describe Ms. Rice as hard charging
but disciplined, a manager who brings a laser-like focus and blunt-
spoken clarity to tasks large and small.

“She’s a tenacious battler for the policies and principles she
believes in,” a member of the Obama foreign policy team who worked
with Ms. Rice in the Clinton administration, John Prendergast, said.
“She really will not quit.”

Those who have worked with Ms. Rice said her style could occasionally
ruffle feathers, but a member of Mr. Obama’s foreign policy inner
circle, Major General Scott Gration, said that while she was a “take-
charge person,” she was well-liked. “She accomplishes a task while
building a team,” General Gration said, adding that she often runs Mr.
Obama’s foreign policy meetings along with Mr. Lake and Denis
McDonough, a former top aide to Senator Daschle. “She’s a great
administrator,” he said. The Obama campaign has at times made use of
her as a surrogate spokeswoman; the day of the Iowa caucuses, she
appeared on Fox News Channel to speak about the campaign in general,
not about specific foreign policy issues.

Ms. Rice, a fellow at the Brookings Institution, is married to an ABC
News producer, Ian Cameron, with whom she has two young children.”My
leadership style is one that aims to be inclusive and to mobilize and
encourage people to give their best,” she said. “I plead guilty as
charged to wanting to move and get things done and occasionally being

As for her role under a possible President Obama, she demurs, saying
she is focused on getting the senator elected. “I am not focused on
what I do thereafter,” she said.


Alec Ross serves as Executive Vice President for External Affairs and
is a co-founder of One Economy Corporation. Under his leadership, One
Economy has established groundbreaking programs and corporate
partnerships with top-of-market private sector, governmental and
nonprofit organizations across sectors including the
telecommunications, financial services and education fields to help
achieve One Economy’s mission.

He also stewards One Economy’s public policy initiatives, which
include federal and local leadership in lawmaking and regulatory
issues regarding technology and telecommunications in low-income
communities. These efforts culminated in Bring IT Home, a national
campaign that has helped change housing policies in 42 states and
brought broadband to hundreds of thousands of low-income Americans.

Alec is a nationally respected social entrepreneur who speaks
regularly on topics including economic development, technology,
philanthropy and public policy.

Prior to the founding of One Economy in July of 2000, Alec served as
Special Assistant to the President of The Enterprise Foundation. In
this capacity, he led special projects and the development of
strategies related to new business development, fundraising,
technology, and program development.

A 1994 graduate of Northwestern University, Alec taught for two years
in inner city Baltimore through Teach For America and was featured in
a 3 part series in the Baltimore Sun.

He sits on the board of several organizations including The Green
School, 1000 Friends of Maryland, One Global Economy and the Aspen
Institute’s MicroMentor Project.


Lawrence Lessig is a Professor of Law at Stanford Law School and
founder of the school’s Center for Internet and Society. Prior to
joining the Stanford faculty, he was the Berkman Professor of Law at
Harvard Law School, and a Professor at the University of Chicago. He
clerked for Judge Richard Posner on the 7th Circuit Court of Appeals
and Justice Antonin Scalia on the United States Supreme Court.




“But as I look under the hood of Obama’s policy shop and see what
Obama policy guru Karen Korbluh, former Clinton NEC official Dan
Tarullo, and former Treasury Department chief-of-staff Michael Froman
have been orchestrating, I’m very impressed.

Also part of the semi-close ring of Obama econ advisers are labor
economist Jared Bernstein and Wolfowitz-critic and former World Bank
Chief Economist Joseph Stiglitz.”



Obama’s Economic Brain Trust Breaks With `Status Quo’
By Rich Miller and Matthew Benjamin  /  May 10 2007

Senator Barack Obama portrays himself as a new kind of leader who
transcends conventional politics. Judging by the economists he has
enlisted in his campaign for the Democratic presidential nomination,
he may just be.

Obama’s economic brain trust — a blend of up-and-coming academics and
former officials in President Bill Clinton’s administration —
displays a fondness for backing innovative solutions to the nation’s
problems. Among them: offering ailing U.S. automakers aid in return
for increased investment in hybrid cars and rewarding doctors for the
improvements they make in patients’ health.

“They bring to the campaign some fresh thought on approaches that are
non-status quo,” says Alan Blinder, a Princeton University economist
and former vice chairman of the Federal Reserve.

Obama, 45, is a freshman Illinois senator who, thus far, has been
known more for soaring oratory than policy specifics. His surging
candidacy, which has made him the chief rival to the Democratic
frontrunner, Senator Hillary Clinton of New York, and the decision of
many states to move up their 2008 primaries and caucuses, put pressure
on Obama to begin filling in the blanks.

Three academics — Austan Goolsbee, 37, a University of Chicago
professor and columnist for The New York Times, Jeffrey Liebman, 39, a
pension and poverty expert at Harvard University, in Cambridge,
Massachusetts, and David Cutler, 41, a Harvard health economist —
form the core of Obama’s economic team.

`Top-Notch Economists’

“They’re all top-notch economists,” said Greg Mankiw, a Harvard
professor and former chief White House economist for President George
W. Bush. “Their views are left of the political center, as one would
expect, but only slightly.”

A trio of seasoned Washington hands bolsters the academics: Karen
Kornbluh, policy director in Obama’s Senate office; Daniel Tarullo, a
professor at Georgetown University in Washington, and a former senior
economic adviser in the Clinton administration; and Michael Froman,
the chief of staff for former Treasury Secretary Robert Rubin who now
works with his old boss at Citigroup Inc.

Obama’s economic cadre, like the candidate himself, is still evolving.
The candidate is shopping for a big-name macro economist to join the
group, perhaps one with the cachet of former Bush economist Glenn
Hubbard, who recently joined the team of Republican candidate Mitt

Most national polls show Clinton in the lead for the Democratic
presidential nomination, with Obama coming in second. In last month’s
Bloomberg/Los Angeles Times poll, Clinton was favored by 33 percent of
primary voters and Obama was the choice of 23 percent.

Detroit Speech

Obama made his most detailed economic proposal to date on May 7, in a
speech in Detroit. He proposed a novel remedy for helping automakers
while also curbing America’s energy consumption. Under the plan, the
federal government would help the industry pay for some retiree health
benefits if automakers invest in more fuel-efficient vehicles. The
partnership idea, which Mankiw criticized as an unjustified bailout,
would cost an estimated $7 billion over 10 years.

Kornbluh, 44, who joined Obama’s Senate staff in 2002 after working
for the Clinton administration and the New America Foundation in
Washington, helped fashion the trade-off proposal.

Goolsbee said the health-care-for-hybrids plan is the sort of thinking
that Obama is encouraging. Obama, he said, “wants to get beyond the
normal debate between A and B, to try to dream up things that are
different and better.”

GM Reaction

That may not always work. Greg Martin, a spokesman for Detroit-based
General Motors Corp., the world’s largest automaker, reacted coolly to
the plan, saying GM preferred a national solution to the problem of
soaring medical costs.

What’s more, there’s no guarantee that Obama will sign on to every
idea his economists advance because a candidate’s political aides
often dilute economists’ suggestions for fear of stirring controversy.
“As the campaign gears up, there will be a tension between the right
policy response to a problem and the politically expeditious one,”
said Steven Clemons, senior fellow at the New America Foundation.

Obama could also find himself hemmed in by labor unions, which are
pressing the party to abandon the free-trade policies espoused by the
Clinton administration. Goolsbee, the campaign’s top economic adviser,
described himself as a free-trader. He does see a role for government
in cushioning the impact on those workers who lose out from

Trade Policy

The tough task of helping to develop a trade policy that avoids overt
protectionism may fall to Tarullo, a 54-year-old trade expert. Tarullo
“escapes easy labeling,” said former Clinton chief of staff John
Podesta, president of the Center for American Progress, a self-
described progressive advocacy group in Washington. “That makes him
especially valuable in finding new solutions to a new set of thorny

At the top of the Obama team’s to-do list: drafting a plan to extend
medical coverage to all Americans by the end of 2012 while making the
system more efficient. One of Obama’s rivals for the Democratic
nomination, former North Carolina Senator John Edwards, has proposed a
detailed universal health plan and has challenged his rivals to follow

Cutler, whom Obama has put in charge of developing such a blueprint,
has tried to go beyond the long-running debate between advocates of a
government-run “single-payer” system and proponents of a market-
driven approach based on health savings accounts for consumers.

Pay for Performance

Under a pay-for-performance system devised by Cutler, doctors would be
reimbursed not for the services they provide but for the improvements
they make to patients’ health. Patients would be encouraged to take
better care of themselves through preventive care and comparison
shopping for medical cost savings.

“It can help us get past the ideological battles,” said Mark
McClellan, who served as Medicare and Medicaid Services administrator
and commissioner of the Food and Drug Administration under Bush.

The plan isn’t without problems. Henry Aaron, a health-care expert at
the Brookings Institution in Washington, questioned how widely it
could be turned into practice, given the difficulties involved in
measuring the worth of many procedures.

Costly Software

It’s also costly. Cutler has suggested the government spend anywhere
from $115 billion to $156 billion on information- technology equipment
and software for the medical industry.

Liebman, an expert on Social Security, isn’t easily pigeon- holed
either. He has supported partial privatization of the government-run
retirement system, an idea that’s anathema to many Democrats and bears
a similarity to a proposal for personal investment accounts that Bush
promoted, then dropped in 2005.

“Liebman has been to open to private accounts and most people in town
would say he’s a moderate supporter of them,” said Michael Tanner, a
Social Security expert at the Cato Institute in Washington, a research
organization in Washington that advocates free markets and often backs

In a 2005 policy paper Liebman, along with Andrew Samwick of Dartmouth
College in Hanover, New Hampshire, and Maya MacGuineas, a former aide
to Senator John McCain, advocated a mix of benefit cuts, tax increases
and mandatory personal accounts to shore up the system, which will
begin paying more in benefits than it takes in through taxes by 2017
under current actuarial estimates.

Obama has called Social Security’s problems “real but manageable”
and has pledged to preserve what he’s called the “essential
character” of the pension program.

The veteran Washington hands on Obama’s team also get high marks for
their willingness to embrace new ideas. As chief operating officer of
New York-based Citigroup’s alternative investments business, the 44-
year-old Froman pushed micro- lending and securitization to finance
vaccine programs and promote job creation in poor countries.

Froman is “very creative in the way he thinks about such issues as
globalization, trade and economic development,” said Rubin, the
chairman of Citigroup’s Executive Committee, who isn’t involved in
Obama’s campaign.


GOP’s Powell Is Now Advising Obama
BY ELI LAKE  /  June 11, 2007

WASHINGTON — Colin Powell, who only a decade ago was being discussed
as a possible Republican presidential nominee and who more recently
served as President Bush’s first secretary of state, is advising a
Democratic presidential candidate, Senator Obama of Illinois.

Appearing on NBC’s “Meet the Press” yesterday, Mr. Powell said it was
“too soon” to say whether he would endorse the Republican nominee for
president, and he added that he is reserving judgment for now.

“I’ve been around this town a long time, and I know everybody who is
running for office,” Mr. Powell said. “And I make myself available to
talk about foreign policy matters and military matters with whoever
wishes to chat with me.”

Those words appear to represent an extraordinary shift for a man who
made the highest-profile case for the war in Iraq, a war the
Democratic Party leadership contends was waged on the basis of
politicized intelligence.

Mr. Powell, for his part, has said this interpretation of the pre-war
intelligence debate is incorrect. Yesterday, he defended his 2003
presentation of the American case for war, saying he spent five days
checking every fact at CIA headquarters before he gave it. The
presentation was based on the same intelligence estimate that was made
available to Congress, he said, and he noted that many Democrats who
served in Congress at the time later said they did not read the
classified estimate.

One lawmaker who has not had to make such a statement is Mr. Obama,
who in 2002 and 2003 was a state senator in Springfield, Ill., and
opposed the war. “Before the war in Iraq started, Obama had the
courage to stand up to the politics and propaganda and spoke out
against the war, even before the invasion of Iraq,” a spokeswoman for
Mr. Obama’s campaign, Jen Psaki, said. “Any time you have the
opportunity to seek advice on foreign policy from the former secretary
of state, it is a welcome meeting.”

Mr. Obama said in October 2002 that he was “not opposed to all wars,”
just “dumb” and “rash” ones. “What I am opposed to is the cynical
attempt by Richard Perle and Paul Wolfowitz and other armchair weekend
warriors in this administration who shove their own ideological
agendas down our throats, irrespective of the costs in lives lost and
in hardships borne,” he said at a rally hosted by Act Now to Stop War
and End Racism.

Since his election to the Senate in 2004, Mr. Obama has adopted a more
moderate stance. While many in his party, including Senator Clinton,
have criticized the faulty intelligence leading up to the war, Mr.
Obama has co-authored legislation to help secure loose chemical and
biological weapons and keep them out of the hands of terrorists.

In October 2005, Mr. Obama accompanied Senator Lugar, a Republican of
Indiana who was then chairman of the Senate Foreign Relations
Committee, on a fact-finding mission to the former Soviet bloc. In a
speech at the Council on Foreign Relations after the trip, Mr. Obama
said: “The demand for these weapons has never been greater. … Right
now rogue states and despotic regimes are looking to begin or
accelerate their own nuclear programs.”

Nonetheless, Mr. Obama has since expressed opposition to the surge of
American troops in Iraq and has endorsed plans to withdraw from the
country by 2008, a position shared by more than 60% of Americans,
according to a New York Times poll in May.

Mr. Powell may not share that position, but he did express pessimism
on “Meet the Press” yesterday about the prospects for the surge. He
believes that American forces in Iraq are facing a “civil war,” he
said, and he noted that the White House has not called the conflict in
Iraq a civil war. “The current strategy to deal with it, the military
surge, our part of the surge under General Petraeus — the only thing
it can do is put a heavier lid on this boiling pot of civil war stew,”
he said.

For close Powell watchers, this sort of statement may not be
surprising. As secretary of state during the 2004 election season, he
hinted to the editorial board of the New York Times that had he known
no weapons of mass destruction would be found in Iraq, he would not
have supported the war.

More recently, Mr. Powell kept mum after his former chief of staff,
Lawrence Wilkerson, said the Bush administration was being run like a
“cabal.” In 2005, Mr. Wilkerson helped sink the White House’s
nomination of John Bolton as ambassador to the United Nations; Mr.
Powell did not sign a letter of former Republican secretaries of state
endorsing the Bolton nomination.

Mr. Powell’s positions on a number of national security issues appear
to be more in sync with those of Democrats. On “Meet the Press,” for
example, Mr. Powell said he would close the military prison at
Guantanamo Bay, Cuba, which holds suspected terrorists. “I would
simply move them to the United States and put them into our federal
legal system,” he said.

A former spokesman for the Republican National Committee, Clifford
May, said he thinks it is fine for Mr. Powell to offer his advice to
all presidential candidates. “If Colin Powell is advising candidates
from both parties on foreign policy, that is commendable,” Mr. May,
the president of the bipartisan Foundation for the Defense of
Democracies, said. “Foreign policy and national security ought to be
beyond partisanship. They have not been in recent years, and that is
deeply regrettable.”


Behind Obama and Clinton
BY Stephen Zunes | February 4, 2008

Voters on the progressive wing of the Democratic Party are rightly
disappointed by the similarity of the foreign policy positions of the
two remaining Democratic Party presidential candidates, Senator
Hillary Clinton and Senator Barack Obama. However, there are still
some real discernable differences to be taken into account. Indeed,
given the power the United States has in the world, even minimal
differences in policies can have a major difference in the lives of
millions of people.

As a result, the kind of people the next president appoints to top
positions in national defense, intelligence, and foreign affairs is
critical. Such officials usually emerge from among a presidential
candidate’s team of foreign policy advisors. So, analyzing who these
two finalists for the Democratic presidential nomination have brought
in to advise them on international affairs can be an important
barometer for determining what kind for foreign policies they would
pursue as president. For instance, in the case of the Bush
administration, officials like Donald Rumsfeld, Paul Wolfowitz, and
Richard Perle played a major role in the fateful decision to invade
Iraq by convincing the president that Saddam Hussein was an imminent
threat and that American forces would be treated as liberators.

The leading Republican candidates have surrounded themselves with
people likely to encourage the next president to follow down a
similarly disastrous path. But what about Senators Barack Obama and
Hillary Clinton? Who have they picked to help them deal with Iraq war
and the other immensely difficult foreign policy decisions that
they’ll be likely to face as president?

Contrasting Teams

Senator Clinton’s foreign policy advisors tend to be veterans of
President Bill Clinton’s administration, most notably former secretary
of state Madeleine Albright and former National Security Adviser Sandy
Berger. Her most influential advisor – and her likely choice for
Secretary of State – is Richard Holbrooke. Holbrooke served in a
number of key roles in her husband’s administration, including U.S.
ambassador to the UN and member of the cabinet, special emissary to
the Balkans, assistant secretary of state for European and Canadian
affairs, and U.S. ambassador to Germany. He also served as President
Jimmy Carter’s assistant secretary of state for East Asia in propping
up Marcos in the Philippines, supporting Suharto’s repression in East
Timor, and backing the generals behind the Kwangju massacre in South

Senator Barack Obama’s foreign policy advisers, who on average tend to
be younger than those of the former first lady, include mainstream
strategic analysts who have worked with previous Democratic
administrations, such as former national security advisors Zbigniew
Brzezinski and Anthony Lake, former assistant secretary of state Susan
Rice, and former navy secretary Richard Danzig. They have also
included some of the more enlightened and creative members of the
Democratic Party establishment, such as Joseph Cirincione and Lawrence
Korb of the Center for American Progress, and former counterterrorism
czar Richard Clarke. His team also includes the noted human rights
scholar and international law advocate Samantha Power – author of a
recent New Yorker article on U.S. manipulation of the UN in post-
invasion Iraq – and other liberal academics. Some of his advisors,
however, have particularly poor records on human rights and
international law, such as retired General Merrill McPeak, a backer of
Indonesia’s occupation of East Timor, and Dennis Ross, a supporter of
Israel’s occupation of the West Bank.

Contrasting Issues

While some of Obama’s key advisors, like Larry Korb, have expressed
concern at the enormous waste from excess military spending, Clinton’s
advisors have been strong supporters of increased resources for the

While Obama advisors Susan Rice and Samantha Power have stressed the
importance of U.S. multilateral engagement, Albright allies herself
with the jingoism of the Bush administration, taking the attitude that
“If we have to use force, it is because we are America! We are the
indispensable nation. We stand tall, and we see further into the

While Susan Rice has emphasized how globalization has led to uneven
development that has contributed to destabilization and extremism and
has stressed the importance of bottom-up anti-poverty programs, Berger
and Albright have been outspoken supporters of globalization on the
current top-down neo-liberal lines.

Obama advisors like Joseph Cirincione have emphasized a policy toward
Iraq based on containment and engagement and have downplayed the
supposed threat from Iran. Clinton advisor Holbrooke, meanwhile,
insists that “the Iranians are an enormous threat to the United
States,” the country is “the most pressing problem nation,” and
Iranian President Mahmoud Ahmadinejad is like Hitler.

Iraq as Key Indicator

Perhaps the most important difference between the two foreign policy
teams concerns Iraq. Given the similarities in the proposed Iraq
policies of Senator Hillary Clinton and Senator Barack Obama, Obama’s
supporters have emphasized that their candidate had the better
judgment in opposing the invasion beforehand. Indeed, in the critical
months prior to the launch of the war in 2003, Obama openly challenged
the Bush administration’s exaggerated claims of an Iraqi threat and
presciently warned that a war would lead to an increase in Islamic
extremism, terrorism, and regional instability, as well as a decline
in America’s standing in the world.

Senator Clinton, meanwhile, was repeating as fact the administration’s
false claims of an imminent Iraqi threat. She voted to authorize
President Bush to invade that oil-rich country at the time and
circumstances of his own choosing and confidently predicted success.
Despite this record and Clinton’s refusal to apologize for her war
authorization vote, however, her supporters argue that it no longer
relevant and voters need to focus on the present and future.

Indeed, whatever choices the next president makes with regard to Iraq
are going to be problematic, and there are no clear answers at this
point. Yet one’s position regarding the invasion of Iraq at that time
says a lot about how a future president would address such questions
as the use of force, international law, relations with allies, and the
use of intelligence information.

As a result, it may be significant that Senator Clinton’s foreign
policy advisors, many of whom are veterans of her husband’s
administration, were virtually all strong supporters of President
George W. Bush’s call for a U.S. invasion of Iraq. By contrast, almost
every one of Senator Obama’s foreign policy team was opposed to a U.S.

Pre-War Positions

During the lead-up to the war, Obama’s advisors were suspicious of the
Bush administration’s claims that Iraq somehow threatened U.S.
national security to the extent that it required a U.S. invasion and
occupation of that country. For example, Zbigniew Brzezinski, national
security advisor in the Carter administration, argued that public
support for war “should not be generated by fear-mongering or

By contrast, Clinton’s top advisor and her likely pick for secretary
of state, Richard Holbrooke, insisted that Iraq remained “a clear and
present danger at all times.”

Brzezinski warned that the international community would view the
invasion of a country that was no threat to the United States as an
illegitimate an act of aggression. Noting that it would also threaten
America’s leadership, Brzezinski said that “without a respected and
legitimate law-enforcer, global security could be in serious
jeopardy.” Holbrooke, rejecting the broad international legal
consensus against offensive wars, insisted that it was perfectly
legitimate for the United States to invade Iraq and that the European
governments and anti-war demonstrators who objected “undoubtedly
encouraged” Saddam Hussein.

Another key Obama advisor, Joseph Cirincione of the Carnegie
Endowment, argued that the goal of containing the potential threat
from Iraq had been achieved, noting that “Saddam Hussein is
effectively incarcerated and under watch by a force that could respond
immediately and devastatingly to any aggression. Inside Iraq, the
inspection teams preclude any significant advance in WMD capabilities.
The status quo is safe for the American people.”

By contrast, Clinton advisor Sandy Berger, who served as her husband’s
national security advisor, insisted that “even a contained Saddam” was
“harmful to stability and to positive change in the region,” and
therefore the United States had to engage in “regime change” in order
to “fight terror, avert regional conflict, promote peace, and protect
the security of our friends and allies.”

Meanwhile, other future Obama advisors, such as Larry Korb, raised
concerns about the human and material costs of invading and occupying
a heavily populated country in the Middle East and the risks of chaos
and a lengthy counter-insurgency war.

And other top advisors to Senator Clinton – such as her husband’s
former Secretary of State Madeleine Albright – confidently predicted
that American military power could easily suppress any opposition to a
U.S. takeover of Iraq. Such confidence in the ability of the United
States to impose its will through force is reflected to this day in
the strong support for President Bush’s troop surge among such Clinton
advisors (and original invasion advocates) as Jack Keane, Kenneth
Pollack, and Michael O’Hanlon. Perhaps that was one reason that,
during the recent State of the Union address, when Bush proclaimed
that the Iraqi surge was working, Clinton stood and cheered while
Obama remained seated and silent.

These differences in the key circles of foreign policy specialists
surrounding these two candidates are consistent with their
diametrically opposed views in the lead-up to the war.

National Security

Not every one of Clinton’s foreign policy advisors is a hawk. Her team
also includes some centrist opponents of the war, including retired
General Wesley Clark and former Ambassador Joseph Wilson.

On balance, it appears likely that a Hillary Clinton administration,
like Bush’s, would be more likely to embrace exaggerated and alarmist
reports regarding potential national security threats, to ignore
international law and the advice of allies, and to launch offensive
wars. By contrast, a Barack Obama administration would be more prone
to examine the actual evidence of potential threats before reacting,
to work more closely with America’s allies to maintain peace and
security, to respect the country’s international legal obligations,
and to use military force only as a last resort.

Progressive Democrats do have reason to be disappointed with Obama’s
foreign policy agenda. At the same time, as The Nation magazine noted,
members of Obama’s foreign policy team are “more likely to stress
‘soft power’ issues like human rights, global development and the
dangers of failed states.” As a result, “Obama may be more open to
challenging old Washington assumptions and crafting new approaches.”

And new approaches are definitely needed.





Q. When most people hear the term “sex with robots” they probably
imagine something from their experience of popular media, whether it’s
a Star Wars robot, Bender from Futurama, or the maid from the Jetsons.
Can you explain what in your writing you mean when you talk about sex
with robots?

A. I am thinking in terms of androids – robots designed in a humanlike
form – of which many examples can be found on the Web site http://www.androidworld.com.
But in addition to having arms, legs and a head, sexual robots will
also have human-sized genitalia. This idea is not at all as far
fetched as might first appear.

As long ago as the late 19th century there were manufacturers, in
Paris and elsewhere, who made artificial vaginas and even whole
artificial bodies, designed specifically to provide substitutes for
the female genitals and thereby to allow fornication. These products
were known as “dames de voyage” (ladies of travel) and were
particularly recommended for use by sailors during long periods at
sea. The sex robots that I envisage will, of course, employ 21st
rather than 19th century technology, but the basic idea is the same.

Q. In your most recent book you outline some of the research endeavors
and technological developments already underway that you predict might
produce some of the first opportunities for humans to have sex with
robots. Can you describe some of these?

A. There are many sex-related inventions that have been patented over
the past century or so. In fact there is a whole book devoted to the
subject of sex inventions at the U.S. Patent Office.

In “Robots Unlimited” I describe a recent patent application by an
Australian inventor, Dominic Choy. This is just one taste of things to
come. What I see happening is that the merging of many different
technologies will lead to the creation of robots that provide many of
the physical attributes required of a skilled lover.

Scientists have already developed artificial skin sufficiently
sensitive to distinguish between a gentle caress and firm pressure;
and the complementary capability – an artificial finger that can apply
sensuous strokes. There is also research into silicone-based and
similar types of materials used in the RealDoll and rival products,
materials that provide for the user a measure of simulation of
coupling with a human sex partner. Then add one or more of the
specifically sexual electronic technologies that are already
available, such as those employed for the benefit of women in the
Thrillhammer, the Sybian, or the hugely popular vibrators that
pleasure so many millions of customers; or the male equivalents –
vibrating penis rings. The combination of these technologies and
others will enable robots to deliver sexually awesome experiences.

Q. One of the things I found most surprising in reading your book was
the amount of research that is already underway in this area. In
particular I was excited by the thinking and experimentation around
robot reproduction. Can you explain what is meant by this term, and
maybe describe a few examples of research being done in this area.

A. Robot scientists have already made the first major breakthrough in
this field, with the development by Hod Lipson and Jordon Pollack at
Brandeis University of robots that simulate evolution and can design
new robots based on a trial-and-error process. This project has
already reached the stage where one robot can pick up the components
of another robot and assemble it.

We are, of course, very familiar with the idea of robots on the
assembly line, picking up the pieces of an automobile or whatever and
assembling them into one identical vehicle after another. Yet the idea
of a robot assembling replicas of itself is somehow intuitively
different for many people, probably because it is a little scary. The
science fiction literature is riddled with examples of robots that
reproduce, sometimes until there are so many of them that they are
able to take over the world. Now that the first stage of this process
has become science fact, it would not be surprising if many people
were to view this branch of robotics research with a certain amount of

What I have described so far relates only to the physical construction
of robots. But what about their “brains”, their emotions, their
personalities? A robot’s brain is some form of computer, running
software that has been developed to give the robot its mental
capabilities, including its emotions and personality. Over and above
the research into the physical self-reproduction of robots there is
also a research effort into self-reproducing software, programs that
can evolve into (hopefully) better programs – better in the sense of
being better able to perform its designated task(s). This idea is
based on genetics. The basic method is called a “genetic algorithm”
and, put simply, it works by having parts of a computer program
measuring how well or how badly they are performing and then improving
themselves through a process that simulates natural selection,
spawning a new, better generation of programs. It does not take much
imagination to realize that robots which can self-reproduce
physically, and also self-improve their own software, could evolve
almost beyond the dreams of science fiction writers.

One aspect of robot reproduction that I personally find very exciting
is the possibility that intelligent robots will be able to copy some
of the characteristics and physical features of their human owners.
Imagine, for example, that your robot has been programmed to “like”
the sound of your voice. When it designs its successors it can copy
the characteristics of your voice into the speech synthesis software
employed in those successors, resulting in robots that talk like you
do. As yet I am not aware of any research in this area, but the
recognition and speech synthesis technologies are already with us, and
I do not believe it will be very long before the idea is explored by

Q. Several times in your writing you slip anthropomorphizing language
in, so suddenly a computer program has intuition, or feelings, where
before it simply had a series of predictable responses to very
intelligent programming. I think for many people this will be one of
the greatest fears, and barriers to conceptualizing a human + robot
sexuality. When you write about the ethics of robot sex it calls to
mind the question of consciousness and sentience. Do you foresee
robotic consciousness? Or put another way, will we eventually produce
robots that are just like us?

A. The sometimes use of anthropomorphisms was quite deliberate. I hope
that in this way the reader will be led somewhat gently to the feeling
that the robots of the future will, at least in some sense, be alive.

I do forsee robot consciousness, and this is the subject of Chapter
12. One problem, of course, with the consciousness debate, is the lack
of a generally acceptable definition of the term. But in the sense
that the word is normally used, yes, I am convinced that robots will
act as though they possess consciousness. And if they do so act, then
we will not be able to deny that they have consciousness.

As to whether we will eventually produce robots that are just like us,
the answer here is “not exactly like us, but close”. Shakespeare’s
sixteenth century test: “If you prick me, do I not bleed?” will detect
one of the differences, and there will be others, but in terms of the
outward appearance and behavior of robots, I am convinced that they
will be designed to be all but indistinguishable to the vast majority
of the human population.

Q. You write that many people may feel threatened by the possibilities
of human robot sexual interactions. This response reminds me of the
very common response many people still have to sex toys and vibrators
in particular. Many straight men feel that a vibrator is a “threat” to
them, believing it could replace them. Many straight women will say
they don’t “need” a vibrator because they have a partner. You write
about how robots could provide sexual contact for people who may feel
unable to have it with another human. To what extent do you think
sexual interactions between humans and robots would replace sex
between two people?

A. I think it is a natural reaction for many heterosexual men to feel
threatened by vibrators, and therefore by robots, especially in
contemporary sexual culture in which the need to be able to sexually
please and satisfy your woman is promoted so widely in books and other
media, and is often the subject of boastful conversation.

Most men would feel inadequate if they believed that their woman
enjoyed better orgasms courtesy of a vibrator or a robot, than those
that the men themselves could provide on a regular basis. But I hope
and believe that one of the great benefits of sexual robots will be
their ability to teach lovemaking skills, so that men who do feel
inadequate will be able to take unlimited lessons, in private, from
robot lovers who possess an unrivalled level of knowledge of sexual
techniques and psycho-sexual problems, combined with great skills as
sensitive, patient teachers. And of course, some women will also wish
to avail themselves of the sexual teaching skills of robots.

You are quite right that many straight women will deny any need for a
vibrator because they already feel completely sexually satisfied by
their regular sex partner(s), and for those women it might be the case
that whatever additional sexual pleasures robots could offer them,
they are not of sufficient interest to encourage them to try robot sex
on a regular basis. But the sales figures for vibrators, and the
psychology literature, both popular and academic, are sufficiently
replete with data on sexually frustrated women, that one cannot doubt
the enormous popularity of robot lovers when they become commercially

None of this is intended to suggest that sex between two people will
become outmoded, because I do not believe for one moment that it will.
What I am convinced of is that robot sex will become the only sexual
outlet for a few sectors of the population: the misfits, the very shy,
the sexually inadequate and uneducable, . . .; and that for different
sectors of the population robot sex will vary between something to be
indulged in occasionally, and only when one’s partner is away from
home on a long trip, to an activity that supplements one’s regular sex
life, perhaps when one’s partner is not feeling well, or not feeling
like sex for some other reason.

Q. Here’s where I start to get worried. I’m afraid that rather than
enhancing a social experience (such as sex), technology will allow us
as humans to avoid evolving socially by using technology to mimic
social interaction rather than add to it. Currently the biggest
problem for people who are socially marginalized (which is what I’m
assuming you meant by “misfit”) is not that they aren’t able to have
sex, or make meaningful connections with others, it’s that our society
functions in a way to systemically keep them isolated. As the
disability activist and academic Tom Shakespeare says “the trouble is
not how can we have sex, it’s who can we have sex with”. And while
there is no doubt that people who are socially marginalized want to
have casual rollicking sex, just as often they report that what they
long for is the intimacy, human contact, and human connections, that
come with sexual intimacy and exploration. If these robots are
intended in any way to increase the opportunity and potential of human
sexuality, using them in this way would be seriously
counterproductive. What are your thoughts on this?

A. I do not see why using robots to satisfy the sexual and intimacy
needs of the socially marginalized is likely to be counterproductive.
If you mean that providing robots to satisfy needs that the socially
marginalized would prefer to be satisfied by humans, will make it less
likely that the socially marginalized will want or be able to find
suitable human partners, then you might be right, but I would still
argue that the benefits to the socially marginalized far outweigh the
negatives. Tom Shakespeare’s words ring true – the socially
marginalized do experience much more difficulty than others in finding
human contact, intimacy and sex.

That is a simple fact, and it is understandable. I feel that the
validity of your “counterproductive” argument, if I understand it
correctly, assumes that the socially marginalized can indeed find
intimacy and sex when they need it, in which case they will not need
to employ robots for these purposes. If that is so, then all well and
good. But my point is simply that there are groups in society who do
find it extremely difficult, almost impossible, to mate with partners
who will love them and satisfy their emotional and sexual needs on a
long-term basis. In many ways robots represent a very good way out of
this problem, just as the Japanese and American governments are now
looking at the possibility of using robots as carers for the elderly.
I firmly believe that in time robots will not only become carers,
sensitive to the emotional and practical needs of the elderly, but
that they will also become our friends if we want them to, and our
companions, lovers and marriage partners.
I would not describe any of this as counterproductive.

Q. I have to say that for me possibly the least interesting part of
the potential for human robot sexuality is the piece about sexual
technique. There are thousands of books, videos, and workshops for
people to learn “better” technique, and while you point out a variety
of ways that robots will allow a more immersive experience, ultimately
I’m aware that technique is just one (arguably small) part of sexual
expression. Have you considered the ways that robots may extend human
experience of sexuality beyond offering technical assistance and/or
providing sexual services?

A. I do not feel that we should downplay the importance of robots as a
means of teaching and enhancing sexual technique. So many
relationships founder because of dissatisfaction in the bedroom, and
so many men suffer, as do their partners, because they are unable for
whatever reason (including embarrassment) to work to improve their
lovemaking skills. That is why I highlighted this particular aspect of
robot sex.

But to answer the main part of your question, yes – I most definitely
believe that sexbots will be able to extend the human experience of
sexuality. Let me try to explain one way that this might be achieved,
using methods from other areas of Artificial Intelligence.

In Chapter 6, which explains in simple terms how computers think, the
topics I cover include discovery and invention, as achieved by
computer programs. Without going into any of the detail here, suffice
it to say that it has already been demonstrated that programs can
discover new ideas from existing knowledge and can even devise
inventions that are suitable for patenting. If such a program were to
be developed, incorporating all the knowledge contained in all of the
world’s sex manuals, and with some basic knowledge of human anatomy,
the result could be a plethora of new ideas for lovemaking, new sexual
positions, that robots could teach us and help us practice if we wish.

Another way in which human ideas of sexuality could be extended lies
in the possibility of experimenting with various group combinations,
groups involving one or more sexbots and perhaps more than one human.
Predicting trends in human sexual behavior is not an easy task, but it
is clear that when sexbots are widely available there will be many
more sexual practices to be tried.

Q. Your argument for the development of a more sophisticated ethical
discussion around human robot sexual interaction is based on the idea
that robot development in this area is inevitable, and we might as
well get ready for it, and start thinking now about the issues that
will come up. Can you give some examples of the ethical dilemmas you
see facing us as human robot sexual interactions become a reality?

A. The ethics of robot sex is a very broad subject, too broad to
discuss in detail in an interview, but I can certainly give some
examples of the types of ethical problem that I foresee.

Firstly there is the question of how one’s use of one’s own sex robot
will affect other people – one’s spouse or partner in particular. Will
sex with a robot be considered unfaithful? Will it be unethical in
some way to say to one’s regular human sex partner: “Not tonight
darling. I’m going to make it with the robot.”? (Some couples will, of
course, own two robots, a malebot and a fembot, and will enjoy
orgiastic sessions in which three or all four of them take part.) Will
robot swapping be viewed as being similar to wife swapping?

Then there are issues relating to the use of other people’s sexbots.
What will be the ethics of lending your sexbot to a friend, or
borrowing theirs? What about using a friend’s sexbot without telling
the friend?

There will certainly be ethical (and legal) issues relating to the use
of sexbots by minors. Should the age of consent for sex with a robot
be the same as that for sex with a human? And what about the ethics of
an adult encouraging a minor to have sex with a robot? Will it be
regarded as a sex educational experience, or as a corrupting
influence? And how will ethicists and lawyers deal with parents when
one of them wants their child to have sex with a robot, as a method of
sex education for example, but the other does not?

Finally, there is the matter of the ethics of robot sex as they affect
the robot itself. In “Robots Unlimited” I discuss some questions of
robot ethics, which in my opinion is one of the most interesting
topics in the debate on the future of robots. What happens when a
robot’s owner feels randy but the robot’s programming causes it to shy
away, possibly because it is running its self-test software or
downloading some new knowledge and does not wish to be interrupted, or
possibly because its personality was designed in such a way that it
sometimes says “no” for whatever reason.

Under such circumstances, is it akin to rape if the robot’s owner
countermands the robot’s indicated wish to refrain from sex on a
particular occasion?

I think you will agree that these examples warn of a minefield for
ethicists and lawyers. “Roboethics” is becoming a respectable academic
topic, for example earlier this year I attended a workshop on
roboethics organised by the Scuola di Robotica in Genoa, Italy, and a
couple of weeks later there was a similar conference in Palermo,
Sicily. So the subject is very much under discussion, although the
discussion is still in its very earliest stages.

Q. There seems to be so many ways that AI and robotics can potentially
have a positive impact on human existence and experience. Where do you
think sexuality fits in the larger picture. Do you imagine that as the
technology improves, sexuality will be one of the early testing
grounds for human robotic interactions? Do you think sex robots will
ultimately be a fad?

A. I believe that sexuality fits in the larger picture in BIG BOLD
LETTERS. What is the word most often typed into Google and the other
search engines? Sex! What was the most prolific use made of video
cassette recorders when they came on the market? Porno movies. What
was one of the first major social changes that came about with the
launch of the automobile? Young couples who wanted privacy so that
they could make love would borrow father’s car for the purpose (and
many still do so today). These are examples of inventions that were
not created with sexuality in mind, but for which sexuality became an
important use.

When we create robots that are specifically invented with sexuality in
mind, the level of interest and the desire to use them will, I
believe, be beyond the wildest dreams of product designers and

I think that sexuality will be far more than an early testing ground
for robots. It will not only be the most popular use of robots amongst
adults, it will also create huge social change. There is no way I can
see sexbots as being a fad, any more than one could say that sex is a

Q. Can you talk about what’s next, and what you’re working on now?

A. As I was collecting the research material and writing the book I
became increasingly fascinated by the subject of intimate
relationships with artificial partners. Originally I was planning only
one chapter on this subject, for reasons of space, but I had to extend
it into two chapters, one on robot emotion and love, the other on
robot sex and reproduction.

Then my wife pointed out that, in exploring these topics, I had almost
ignored the ethical implications, and questions such as consciousness,
and that these are important areas that needed to be addressed. So I
researched some more and added two more chapters. After I delivered
the book to the publisher I decided to write another book.

Whereas “Robots Unlimited” focuses on the how of Artificial
Intelligence, including the how of robot love and sex, I decided that
there was a need for a book on the why of all this. Why will people be
attracted to robots? Why will people fall in love with robots? Why
will people want to have sex with robots? And even why will people
want to marry robots? I am now nearing completion of that book and
have recently signed with a New York literary agent, who is currently
working with me to ensure that it will be interesting for a very wide
readership. I plan to keep a close watch on robot sex, to make it my
major area of interest within A.I. for the next few years. I believe
that the speed of development in this field will be extremely rapid,
due in part to the enormous sums of money that the developers of such
products will be able to reap, and partly because of the enormous
worldwide interest in and desire for better sex.




* A robot may not injure a human being, or, through inaction,
allow a human being to come to harm.
* A robot must obey the orders given it by human beings except
where such orders would conflict with the First Law.
* A robot must protect its own existence as long as such
protection does not conflict with the First or Second Law.

Asimov detected as early as 1950, a need to extend the first law,
which protected individual humans, so that it would protect humanity
as a whole. Thus, his calculating machines “have the good of humanity
at heart through the overwhelming force of the First Law of
Robotics” (emphasis added). In 1985 he developed this idea further by
postulating a “zeroth” law that placed humanity’s interests above
those of any individual while retaining a high value on individual
human life.

Zeroth law: A robot may not injure humanity, or, through inaction,
allow humanity to come to harm.












“(1) A dead person’s face may indeed be uncanny: it loses color and
animation with no blinking. However, according to my experience,
sometimes it gives us a more comfortable impression than the one given
by a living person’s face. Dead persons are free from the troubles of
life, and I think this is the reason why their faces look so calm and
peaceful. In our mind there is always an antinomic conflict that if
you take one thing you will lose the other. Such a conflict appears on
one’s face as troubles, and makes his, or her, expression less
comfortable. When a person dies he, or she, is released from this
antinomy, and has a quiet expression. If so, then, where should we
position this on the curve of the uncanny valley? This is an issue of
my current interest.

(2) Once I positioned living human beings on the highest point of the
curve in the right-hand side of the uncanny valley. Recently, however,
I came to think that there is something more attractive and amiable
than human beings in the further right-hand side of the valley. It is
the face of a Buddhist statue as the artistic expression of the human
ideal. You will find such a face, for example, in Miroku Bosatsu
(Maitreya Bodhisattva) in Kohryuji in Kyoto, or in Miroku Bosatsu in
Chuguji and in Gakkoh Bosatsu (Candraprabha) in Yakushiji in Nara.
Those faces are full of elegance, beyond worries of life, and have
aura of dignity. I think those are the very things that should be
positioned on the highest point of the curve.”




“In 1978 Japanese roboticist Masahiro Mori was studying the human
response to robots and discovered that as robots became more
humanlike, people’s attitudes toward them became more positive, until
the robots got “almost” human, an area he called the “Uncanny
Valley.”  Since they were so close to human, the little bit they were
lacking really creeped people out . This effect translated beyond
robots to creatures of all kinds and is a good explanation for why we
find zombies so scary (that and the fact that they eat brains), why
CGI and today’s video game characters look so odd. The most
interesting application of this theory is for artificial limbs, which
suggests that until we can make them indistinguishably perfect, we
should stick to more obviously artificial ones. On the upside,
designers could go crazy and offer limbs with all sorts of extra
functionality, maybe throw a flash drive in one finger and a digital
camera in another.”


Q: It could be argued that the written word destroyed short/long-term
memory and computers are outsourcing human intelligence to the extent
that we cannot think or remember without them. What essentially human
traits do you envision future sexbots changing forever?

A:  I believe that sexbots will change our perceptions of human
relationships, and in some ways we will become more demanding with
respect to what we want from a human partner. This is not entirely a
good thing. If someone has great sex with their robot, they will want
the sex with their human partners to be great as well, which could
lead to disappointment. On the other hand, sexbots will be excellent
tutors, so people will be able to be taught the skills necessary in a
great lover.

Q: Obviously, not everyone will be able to afford robots for sex
straight away and top-of-the-line ones will undoubtedly command top
dollar. One could conclude from your book that we will one day live in
a world where robots designed for sexual pleasure are very
commonplace. Do you think there is room for the poor in this vision?

A: Eventually, yes. You are quite right of course about what will
happen in the early days of sexbots – very few people indeed will be
able to afford to buy one. But the robots-for-hire business model will
work. As more and more people experience robot sex and communicate
their experiences to their friends, and in the media, so the demand
will increase and the price will drop. ‘Eventually’ is a very long
time, but consider television ñ in the early days very few could
afford it, but nowadays some homes have 3, 4 or more TVs.

Q: Your book implies that robots designed to love and sexually gratify
humans will greatly reduce, if not eradicate human loneliness. Do you
think that is the case or are loneliness and dissatisfaction
inevitably part of the human condition? Do you think that those
feelings can be eradicated or changed? How?

A: To a large extent I believe that loneliness and dissatisfaction are
now part of the human condition because they have become so, and
therefore I believe they can be largely eradicated. I feel that this
particular argument is difficult to refute. If someone is lonely
because they have no-one to talk to, no-one to love, no-one to love
them, then surely if those deficits are removed from their lives then
these people will become much happier, their lives much richer. Pet
animals have been found to have this effect, so why not robots who
have the additional ability (relative to pet animals) to speak, listen
and make intelligent and emotion-ridden conversation?

Q: People buy used laptops and iPods all the time — but on the other,
the secondhand market for vibrators, butt plugs and other sex toys is
nil. Do you foresee much of a secondhand/refurbished market for

A: An interesting question that Iíve never been asked and never
considered before this interview. I find it difficult to answer this
because I just donít know. On the one hand, as I point out in my book,
STDs will be transmitted via badly kept sexbots ñ my book gives an
example that occurred via a sex doll. But if the depreciation rate is
anything like that for motor cars, then presumably there will be a
secondhand market for reasons of cost.

Q: I find RealDolls (and the people that use them) to be utterly
creepy. While the Keepon is cute and a great dancer, it doesn’t
exactly turn me on either. How do you envision sexbots overcoming the
“uncanny valley” phenomenon?

A: Personally I do not have much faith in the uncanny valley. The
original publication on this topic (dating from 1970) was not based on
any empirical research ñ it was more an intuitive feeling expressed by
Masahiro Mori that has since been hyped into an assumption of fact.
And recently another Japanese roboticist wrote that the uncanny valley
has already been crossed. So if there was such an obstacle, there
probably isnít any more. That is my pragmatic answer to your question.
But looking behind your question, you raise an important point about
what is needed in robotics development to ensure that no such
antipathy exists on a large scale. I believe the answer will be the
creation of very humanlike, lifelike robots. In my book I give the
example of the waxwork at Madame Tussaudís. When robots become that
lifelike in their actions as well as in their appearance, that will
answer your real question.

Q: Is it ethical for an adult to have sex with a sexbot designed to
look like a child but programmed to “perform” like an experienced
adult? Why?

A: I believe that it is ethical provided that the reason is [a] to
attempt to cure the adult of their deviance; and/or [b] to attempt to
stop them, even though they might not be cured, from going after
children. Apart from these cases I can see no other reason.

Q: Would you personally use one of these robots?

A: I would certainly experiment with one, to find out what it was like
— how much like the real thing.

Q: Would your wife?

A: Probably not — she is not interested in anything of a technological

Q: Would she mind if you used one? Surely you’ve talked about it by
now …

A: Actually, no, because it is purely hypothetical since they do not
yet exist.

Q: I ask because I was talking about this with my girlfriend, who, had
she found one of these in my closet in the early stages of our
relationship, would have hailed a cab and never seen me again.

A: She says that, but why? Has she never used a vibrator? And if she
has, why does she think that you shouldn’t have left her immediately
you found out?

Q: To what extent do you think sex robots and their primal pre-
cursors, Real Dolls, actually PREVENT people from forming healthy,
normal relationships?

A: I don’t believe they would do so at all, because it is part of
human nature for (almost) all of us to form normal human
relationships. But a number of interviewers have asked this or similar
questions, so clearly many people are wondering about this. Perhaps
I’m too much of an optimist, but I see sex robots as being hugely
beneficial for society.

Q: Porn culture has pretty well infused pop culture at this point —
clothing is more provocative, we see stories about porn stars on the
news, and elements once relegated to porn films have entered the
mainstream. According to your book, a similar wave will permeate mass
culture when robots reach popular acceptance. What sorts of things do
you think might catch on or wind their way into the popular
consciousness once sexualized robots become mainstream?

A: The idea of sex with robots being normal, and something we can talk
about in polite conversation. There was a time when sex would never
have been a major topic in a dinner party conversation between a group
of couples, and that was reflected in the lack of sex on TV and in
mainstream media at that time. But ideas change, moral values change,
and nowadays there is little or no embarrassment in talking about sex.
So when people start to have sexual experiences with robots in big
numbers, I expect the subject to become mainstream, and therefore the
idea will become normal.

Q: This is a little broad, but I’m curious to see how you might finish
this story:

A group of adolescent boys finds a working, discarded secondhand
sexbot and keep it in their treehouse/shed in the woods, much like
some of us oohed and aahed over a crinkled stolen Penthouse in the
days before internet porn. Difference being, they actually take turns
using the thing. What are the moral implications? Is this a positive
experience? A negative one?

A: They are learning about sex. I do not see anything morally wrong in
adolescents learning about sex.

Last night I lay beached and gasping on my girlfriend’s bed,
blissfully tripping on oxytocin and watching paramecium-shaped
fireworks explode on the back of my eyellds. “What are you thinking,”
she asked, smiling and handing me a glass of water. “Nothing at all,
for once,” I said.

What I was really thinking was: ‘The day this can be reliably faked is
the day that humans are obsolete.’

I have no idea why I couldn’t say that out loud.

BY Noah Robischon

Given the explosion in popularity of doing-it-yourself, it’s
surprising that so few hacks and mods are devoted to the greatest form
of doing it ever: sex. But an exhibition that opened earlier this
month at the Museum of Sex, “Sex Machines: Photographs and Interviews
by Timothy Archibald,” shows that there is an active community of sex
toy hobbyists. The dildonics on display are not intended as artwork.
The function comes first, and any design that results is coincidental.
Most — but not all — lack the ironic message that pervades so much
modern artwork. As a result, these inventions resemble a kind of folk
art sculpted from the Home Depot palette. Archibald’s photographs
capture the juxtaposition of the hard-edged machines in the comforting
and familiar settings where they are built and used. What surprised
Archibald most, though, was that the inventors — an entirely male
bunch — “aren t sexual fringe characters or people who answer the door
wearing a leather zipper mask,” he says. “These people go to PTA
meetings, mow the lawn, eat good food.”

GIZMODO: How did you become interested in DIY sex machines?

TA: I had always been interested in independent inventors, people who
were not associated with a university or a commercial enterprise.
While doing the research for a photo story on that, I came across a
listserv where people who were inventors of sex machines were sharing
tips and talking about problems they had overcome with their
inventions. And they also had photographs of their machines on that
site that they shared with each other. When I saw those, it was this
combination of human phallus with stuff that looks like it came out of
a high school shop class. All mechanical, hard components. The project
that evolved out of that was a look at the people who are making the
machines. The machines are fascinating, but the people s stories are
what made it cohesive, more of a human experience.

GIZMODO: Is the fetish in the making of the machine or the machine

TA: These are tinkerers, people who like to mess with all things
mechanical. And they have a sense of creative invention — they are
proud of these things when they create them. But also they think about
sex a lot and this is what resulted from that combination. It s not
just a sculptural thing. They are making it for a purpose. A number of
them are married, they are making it to try and introduce something to
their wives. Some may be using it to attract women — or they think it
might attract women. And for some of them it s a business. But they
are not part of a scene, like a sexual scene. It s more that they got
the idea independently that this is something they wanted to make,
they wanted to have.

GIZMODO: The Thrill Hammer is one of the most sculptural machines in
the show. What is the function behind that design?

TA: It is an internet controlled sex machine that was originally built
by the inventor to allow people to use the machine on a woman from the
comfort of their own home. People could pay, log on and control this
machine as a woman sat in the machine — and they would be affecting
the sex machine upon her through their mouse and keyboard. It truly
did work. The time I hooked up with the inventor he was installing it
at a legal brothel in Nevada. The whorehouse had licensed this machine
from him for that very purpose. It was also set up so that it could
film the person that the machine was being used upon, and it had
professional lighting installed on it so that the video feed would
look like they wanted it to look. Pretty high-tech gadget.

He went on to make another machine that was based on a couch that he
saw at the Museum of Modern Art in New York. He was influenced by
popular culture. His desire was to make something that visually said
something. He liked this science fiction-y look to it that it has,
that was intentional. In the book and the show there are probably two
or three machines that design was a big part of it. Different
inventors try to implement things in their own way, but oftentimes it
was very primitive or simple, and the function would come first. But
Thrill Hammer was heavily designed. As was the Monkey Rocker.

GIZMODO: Several of the machines are built into toolboxes. And the
name is right there on the side — Craftsman, Huskette. There must be
some kind of message in that.

TA: With the Huskette and even the Craftsman, these guys thought it
was funny. They appreciated the inherent humor in having this logo
that we ve all seen being twisted and used for another purpose. They
knew it would be funny. They were self-aware.

It was also an affordable, neat and clean way to contain the moving
parts that are necessary, and could seem a little dangerous in a
venture like this. There are hard edges and a flywheel. The inventors
needed to find a way to encase these things so that the machine would
be more user friendly. If there was something over the counter that
they could buy in bulk and then modify to their own ends, that would
be the solution to that kind of thing. Also, it allows the buyer to
hide the thing. You got a toolbox under your bed no one is going to
look twice at that — well, maybe they will look twice but not three

GIZMODO: The coffin seems very intentionally self-aware. And it
doesn’t quite fit with the other machines. What’s the story there?

TA: They called that thing the Holy Fuck. That was meant to look like
a little coffin, and had all the details of the coffin. They were
trying to create a piece of art there that had this function. But they
were young, they were these gothic kids. And I wanted them in the
project for that reason. But their thing wouldn t really fall under
the guise of folk art because it s intentional. They had the neat idea
to make it in a tiny coffin and give it a funny name. It reflects
them, like any piece of art.

To me all these things are art and they tell us something about the
creators and the times we live in. But some of them are more self-
conscious than others. Some of the more harsh looking machines end up
being portraits of the inventor and all their concerns. Something like
Thrill Hammer or Holy Fuck, they are trying to make something cool and
it reflects their design taste. But it s not a vision into their brain
like some of the other ones are.

GIZMODO: There are a couple of machines — Marlon Rogers’ Prototype and
Carl Adjusting the boom — that remind me a bit of David Cronenberg’s
film Dead Ringers.

TA: I ve never seen that movie. I m dying to see it. I ve never even
seen a picture from it. Someone else did bring that up. The more raw
the machine, the more it is truly a vision into some of these guys
brains. Everything is exposed — you see how it works and because of
the phallus you can t help but think it reflects their view of
sexuality, or their own sexuality, or how sexuality should look.

The thing to keep in mind is that all of these machines, as different
as they seem, as outlandish as some are, they all do the same thing.
And that is simply go in and out.

“Jessie In Steven’s Living Room” (Timothy Archibald)


GIZMODO: What is the purpose of your work — is it documentary or is
there a message you are imparting to the viewer about these machines?

TA: It started out as a documentary project. I saw these machines and
thought: who would make these things? The machines are visually
fascinating but they must be made by people who could not relate to
women, or could not relate to other people. And the lesson I learned
is that these people are just like me. These aren t sexual fringe
characters or people who answer the door wearing a leather zipper
mask. These people go to PTA meetings, mow the lawn, eat good food.
And how that broke my stereotype was real interesting, and made me
want to pursue the people behind these things. Maybe the surprise of
the normal versus the abnormal. Throughout working on the project we
were always saying it s not sexuality it s sociology. You can t deny
the sexuality of the work. It tells us a bit about men, women, how
they relate to each other, how they see themselves.

Timothy Archibald
email : tim [at] timothyarchibald [dot] com

BY Timothy Archibald

This new sexual underground doesn’t look anything like I thought it

While researching a story about independent inventors in the spring of
2002, I came across a small web community for inventors of sex
machines. The group seemed tiny. It was made up of a handful of guys
with names like “Inventor Bob” and “The Toymaker.” They were sharing
ideas and solving problems in the classic garage-inventor manner.
Amidst tips on reworking domestic hardware into complex sex machines,
their posts would occasionally reveal glimpses into their surprisingly
conventional-sounding, family-oriented personal lives.

And then there were the photographs–amateur snapshots of the machines
inventors shared amongst themselves. These photographs of their
creations, posed in cluttered garages and homey kitchens, were
startling to me in their simple beauty. They were honest documents of
otherworldly creations. I had to meet the people who made these
things. My first attempts to connect with the members of this group
went nowhere. The group’s moderator sent me a polite note thanking me
for my interest. He explained that the group was really just for the
members themselves. They just used the machines in their own
relationships, and valued the anonymity of the Internet. Discouraged,
I tried to let it go. A year later I was still haunted by the images I
had seen of the machines. I resurrected the file I had created on the
sex machine inventors. After doing more research, I found that a local
company had begun producing erotic videos specializing in men and
women having sex with machines. Located in San Francisco, Peter
Rodgers and Tony Pirelli were operating a successful Internet
pornography site called Fuckingmachines.com. They knew a number of the
working inventors and pointed me in the direction of some folks they
thought would be interesting to talk with.

A chance conversation with an inventor got me into the depths of the
Mature Audience section of eBay, where I discovered a regular offering
of 15 to 20 different sex machines daily. Through this I stumbled upon
a number of grassroots sex machine web communities. People in tiny
towns and suburbs across America were building, selling, and
collecting these machines, and sharing their ideas with each other.
What once seemed so elusive was now everywhere I looked.

The first inventor I visited called his business “Sartan’s Workshop.”
Over the phone, Sartan spoke with a deep baritone, sounding very
serious and a bit intimidating. And then there was the name of his
business–it sounded like a misspelling of “Satan” or “Santa’s
Workshop,” and either way it was frightening. What kind of social
misfit would make such a thing as a sex machine?

Sartan ended up being a guy named Paul, who wore a t-shirt of his
favorite football team and smiled a lot. He met me in the driveway of
his family’s upper-middle-class suburban home. We drank beer in the
backyard when the kids came home from school and his wife cooked
dinner. This was no dark and steamy fetish underground…these were
like the people you’d meet at a PTA meeting. This immediately relaxed
me. I knew I could understand these people and felt they would
understand me.

Whom I chose to visit depended on who seemed the most passionate–
inventors who proudly felt they were on a mission. It didn’t matter to
me who was popular or who was making money. Sincerity and passion is
what piqued my interest.

While driving from an interview in Champlin, Minnesota, to another in
Kansas City, Missouri, I was struck with the big questions: What does
this all mean? Are sex machines some embodiment of men’s misguided
attempts at understanding women? Are they a form of contemporary folk
art? Or am I simply witnessing a pop culture trend that will fade away
in a few years?

I soon discovered that the U.S. patent office is filled with early
designs for mechanical sexual devices. A peek into erotic world
history reveals that people have been creating forms of sex machines
since the invention of Cleopatra’s bumblebee-powered vibrator. I began
to see this preoccupation of creating a mechanical sexual creation as
part of human instinct. The technology we now have is allowing the
inventors to share their ideas, but the act of creating these machines
has been going on for centuries. The people I met and documented are
not simply following a trend. They are current practitioners of a
timeless craft, one that will undoubtedly continue long into the


For years, the concept of humans having real, emotional relationships
with robots has been a symbol of technology’s final horizon, partially
because it seems totally implausible. But is it any more absurd than
falling in love with someone thousands of miles away who you’ve only
talked to via keyboard? Or crushing on a celebrity you’ve never met?
Not according to David Levy, the author of the new book Love and Sex
With Robots, which makes a persuasive argument that people can
normalize anything, given enough time. “As people get more and more
accustomed to having electronics as a very big part of their lives,
they will also become accustomed to the intellectually and emotionally
amazing things some of these electronic products do.”

Levy, a fifty-two-year-old Scottish chess champion, first became
interested in artificial intelligence in 1968, when he bet four A.I.
experts that they couldn’t develop a computer that could beat him at
chess within ten years. He won the bet in a highly publicized match at
Northwestern University (though lost his first match to a computer in
1989), and went on to study A.I. himself. Today, he believes we’re on
the cusp of sex between humans and robots — by 2050, he says, robots
will be so similar to us that sex and relationships with them will be
largely accepted by society. Today, Levy is the CEO of Intelligent
Toys Ltd., creating artificially intelligent toys for children. He
spoke to Nerve about the ethics of robot relationships, and why he
wouldn’t mind if his wife had an affair with an android. — Sarah


Q: Why should people want to have relationships with robots instead of
with other people?

A: There are a huge number of lonely people out there who, for one
reason or another, cannot form normal relationships, either platonic
relationships or sexual relationships. This is a big segment of the
population that will find the idea appealing, and I think once it
becomes publicized in the media — once people start being interviewed
about, and writing about, their experiences of these relationships,
sexual relationships in particular — the idea will catch on through

Q: What happens when a person who’s had a relationship with a robot
has to then have one with a human again? Do you think it’s going to be
difficult for people to transition back and forth?”

A: In many ways I believe robots will actually make it easier for
people to interact with other humans. For example, people who have
psychological problems or psychosexual problems could be given therapy
by robots. But the downside is, if someone has a relationship with a
robot, they might have higher expectations of their relationships with
humans. I’m thinking particularly of women who might find robots are
much better lovers than they’re used to, and women who have fantastic
orgasms courtesy of robots might then become more dissatisfied with
their human partners. And the human partners of course could develop
some sort of complex — performance anxiety.

Q: In the book, you write that if a robot appears intelligent or
appears to have a conscience, then we should accept that it is in fact
intelligent and has a conscience. Is it realistic to expect people to
make this mental leap?

A: In the 1950s, when people were talking about if a computer could
play chess better than the world champion, they said, “This is a
ridiculous idea. In order to play chess one has to have true
intelligence.” But over time, people got used to the idea of computers
performing mental and intellectual feats normally associated with
human intelligence, so the idea of artificial intelligence grew within
society very slowly. I think the slowness of the growth made it much
more acceptable, so that when Kasparov was defeated by Deep Blue in
1997, it wasn’t even surprising for most people. I think people are
already beginning to think about the idea of robot consciousness, and
over the next twenty, thirty, forty years, the population will come to
find the idea acceptable.

Q: It’s true that there’s a lot of science-fiction writing about robot
consciousness, but it’s usually presented as a frightening idea.

A: That’s fine, and with good reason. Lots of what used to be science-
fiction fifty or sixty years ago is now science-fact. Robot
consciousness is outside our normal frame of reference.

Q: Do you think people will have very long-term relationships with
robots, like marriages?

A: I think in some cases, yes. I’ve done research into the forum of
people who have bought sex dolls, and who have had these dolls for
years, almost since the RealDoll company started. Some people clearly
enjoy their relationships with their sex dolls and create in their
minds some kind of persona for the doll. So I think if relationships
can last for years with a completely inanimate doll, then I think a
relationship with a talking, intelligent, humorous robot that appears
to be loving, kind, gentle — everything somebody wants in a partner —
can last a very long time.

Q: What happens if a robot malfunctions in one of these relationships?
Couldn’t that be traumatic?

A: One could view it in the same way as your human partner having a
sudden illness. And by the time robots have reached the level of
sophistication I’m talking about, in the middle of the century, the
robots will automatically have the contents of their memory uploaded
and backed up in a massive store, so that if something dreadful
happened to your robot, you could have its physical body replicated in
a factory and have its personality downloaded into it. It’ll be the
equivalent of sending a human to the hospital.

Q: What if your wife wanted to have sex with a robot, in addition to
you — would you be comfortable with that?

A: I don’t know. I never really discuss this with my wife because it’s
purely hypothetical. If these robots were here now, though, I would
see nothing wrong with either my wife or myself trying out robot sex
because I certainly would be very curious to find out what it’s like.
In comparison, my wife would be less so, because she’s not interested
in technology.

One of the things I write about is the idea that when one partner in a
relationship goes off on a business trip, for example, if they have
access to a robot, then the other partner doesn’t have to worry about
what they’re doing in the evenings. And of course, there’s always the
classic, “Not tonight, darling. I’ve got a headache.” If you have a
robot in the cupboard, it doesn’t matter if your partner has a

Q: But you don’t get the same emotional satisfaction from sex with the
robot as you do from sex with your partner, which is what a lot of
people want from sex.

A: Absolutely, yes. But there are a lot of people who would find it a
viable alternative. And there are also people who will enjoy the idea
of threesomes and foursomes with the robot and their partner, and not
have to feel jealous.

Q: If your son or daughter wanted to marry a robot and asked you for
advice, what would you tell them?

A: I would say they should try humans first, but that if they found
for some reason they were unable to have satisfactory relationships
with humans, they sure, why not experiment with a robot?

Q: Do you worry robots might be more attracted to other robots than to

A: That’s just a matter of programming.


“The Loebner Prize Medal and a cash award is awarded annually to the
designer of the computer system that best succeeds in passing a
variant of the Turing Test.In 1997, $2,000 and a bronze medal was
awarded to David Levy,designer of the Most Human Computer as rated by
a panel of 5 judges.”



David Levy
davidlevylondon [at] yahoo [dot] com
DavidL [at] intrsrch [dot] demon [dot] co [dot] uk



Question 1

John: Why would a free minded, sophisticated, intelligent robot choose
to be with an animal? Sure, robots may well become sex machines for
humans, but give them true AI and they become far superior in many
aspects of their creation.

Jeffrey: While the idea of an AI sophisticated enough to create a
functional sex partner is possible, and very likely within the
century, one capable of the complexities of a general relationship is
not only a bit far off but, I imagine, would eventually gravitate to
its own kind – why waste time on training a faulty human?

Sam Sexton: If a robot could fall in love wouldn’t it be more likely
to fall in love with other robots that it could relate too?

David Levy: We will program them to want us. It will be important,
when robots reach the level of intelligence I anticipate by the middle
of this century, for humans to have some measure of control over them.

One aspect of this is the ability of humans to select the parameters
for their partner robots – the robot’s personality, interests, etc, as
I describe in the book. Some of these parameters will relate to the
robot’s relationship preferences, and we will be able to set that
parameter so that our robot behaves as though it wants to be with us.
If we want our robots to have the capacity for falling in love with
other robots, we can set another parameter to ensure that they do so.

Question 2

Steven Martin: Would it be wrong to go further than that and make
androids find overweight people attractive? Would that be any more
wrong that programming them to find slim and fit people attractive?
The logical conclusion to this is would it be OK to program an android
to find a particular individual attractive but otherwise be self-
aware? Where do you cross the “Slavery Line”?

David Levy: An interesting question fraught with ethical overtones.
Fundamentally the human-robot relationship will be one of master and
slave, in the sense that we must retain a measure of control, as
mentioned in my previous answer.

But I see nothing wrong from an ethical perspective in designing
robots that will behave as though they have strong emotional feelings
for their human owner/partner no matter whether that human is fat,
thin, ugly, or whatever.

In chapter 6 of the book, on why people pay for sex, I describe how
the young men who service women clients in holiday resorts will
flatter a fat woman by saying that she has a lovely body. Robots can
be programmed to be similarly diplomatic in what they say to their
humans, in order to convince their humans that the robots have strong
emotional feelings for them.

Question 3

Jason Owen: Will the meaning of relationships over time turn into
another lifestyle upgrade?

David Levy: Yes and no. For all those many humans who have no-one to
love and no-one to love them, having a robot surrogate will definitely
be a lifestyle upgrade, creating happiness where before there was
misery. And I see this as one of the principal benefits, perhaps the
principal benefit, of the type of robot I am writing about.

Wouldn’t the world be a much better place if all those sad, lonely
people did have “someone” to be their lover and life partner? So from
this perspective the answer is “yes” – a definite upgrade in one’s
relationship status.

But for those who are already happy in their relationship with their
spouse or partner, I believe that their relationships with their
robots will be much more of an adjunct than filling a void, so the
meaning of these relationships will be different for a robot’s owner –
less intense emotionally.

Question 4

Vinnie Hall: What of the prospects of reproduction? Do you think an
organic person could breed with a robotic ‘person’?

David Levy: No, but I do anticipate a form of robot asexual
reproduction that carries over some of the characteristics of the
robot’s human owner/partner. This is explained in the book.
Question 5

Tom: Will we need to formulate some Asimov-like rules? Such as:

1st law of sexual-robotics: A robot may not break a human’s heart, or
through inaction allow a human’s heart to be broken.
2nd law: A robot must follow orders except for where this conflicts
with the first law.
3rd law: A robot must satisfy its own need for love, except for where
this conflicts with the first and second laws.

David Levy: An interesting idea. Certainly robots will be programmed
to behave in accordance with certain ethical and legal boundaries, and
to appear to want to please their human owners/partners in various
ways, including in their intimate relationships. And it will appear
natural to their humans if robots exhibit humanlike desires for love.

There is a nascent field within the world of robotics researchers
called “roboethics”, in which such matters are discussed, although I
do not know of any suggestions along these lines, relating to intimate

Question 6

Dana Lee: Would prostitution be legal with robots in places it is not
with a human? Is this just the definition of the ultimate sex toy? If
someone has sex with a robot that is owned by someone else against the
owner’s (or robot’s) wishes, is that considered rape?

David Levy: I feel sure that certain jurisdictions will legislate
against robot prostitution and possibly against robot sex in any form.

In the book (chapter 7) I write about some court cases that have been
brought in recent years by the states of Alabama and Texas against
people who committed the terrible “crimes” of buying (and using), or
selling, vibrators and other sex aids. So I consider it quite likely
that sexually functioning robots in general, and robot prostitutes in
particular, will be proscribed in some jurisdictions. Eventually, of
course, such laws will be repealed.

Is this the ultimate sex toy? It could be considered as such, but the
sophisticated sex robots of the middle of this century will also be
valued as relationship partners in the widest sense of the word –
someone to love.

As to the question of raping a robot, ethicists and law makers will
have a field day debating questions such as this. The legal profession
in the USA is already taking an interest in the legal rights of
robots, in preparation for the day when robots are deemed to have
(artificial) consciousness.

Question 7

Tom: Do you see anything wrong about people having sex with robots?
(I’m assuming not). Isn’t sex with robots just an extension of
pornography? Because you could have exactly what you wanted and it
would always be willing and compliant, a sexbot would be nothing more
than a fetish object. And is it healthy to fall in love with and marry
your fetish object?

David Levy: I see nothing wrong in people having sex with robots. I
believe that it will come to be regarded as a perfectly healthy
activity, just as masturbation (once thought by physicians and
psychiatrists to be the root of just about all health evils) is
nowadays regarded as a perfectly healthy activity. (See chapter 8 of
the book.)

I do not believe for one moment that sex with robots is an extension
of pornography. Regarding a sexbot as a fetish object would be missing
the point – the humanlike behaviour of robots will remove them from
the realm of being “just an object”. What I have written about is in
no way fetishism.

Question 8

Tony: Being that robots will be harder, better, faster and stronger
than us, it is unlikely that humanity will win this evolutionary
contest. The question we should be asking is, with organic
reproduction seemingly out of the way, how do we get as much humanity
into these robots before it’s too late?

David Levy: “…better, faster and stronger than us…” quite right!
That is why a measure of control over them will be needed (see earlier
answers). And this control will come from design and programming.




“A state-of-the-art social robot was immersed in a classroom of
toddlers for >5 months. The quality of the interaction between
children and robots improved steadily for 27 sessions, quickly
deteriorated for 15 sessions when the robot was reprogrammed to behave
in a predictable manner, and improved in the last three sessions when
the robot displayed again its full behavioral repertoire. Initially,
the children treated the robot very differently than the way they
treated each other. By the last sessions, 5 months later, they treated
the robot as a peer rather than as a toy. Results indicate that
current robot technology is surprisingly close to achieving autonomous
bonding and socialization with human toddlers for sustained periods of
time and that it could have great potential in educational settings
assisting teachers and enriching the classroom environment.”

Javier Movellan
email: movellan{at}mplab.ucsd.edu



Giggling robot becomes one of the kids
BY Mason Inman  /  05 November 2007

Children who spent several weeks with an interactive robot, eventually
treated it more like each other than a simple toy

Computers might not be clever enough to trick adults into thinking
they are intelligent yet, but a new study shows that a giggling robot
is sophisticated enough to get toddlers to treat it as a peer.

An experiment led by Javier Movellan at the University of California
San Diego, US, is the first long-term study of interaction between
toddlers and robots.

The researchers stationed a 2-foot-tall robot called QRIO (pronounced
“curio”), and developed by Sony, in a classroom of a dozen toddlers
aged between 18 months and two years.

QRIO stayed in the middle of the room using its sensors to avoid
bumping the kids or the walls. It was initially programmed to giggle
when the kids touched its head, to occasionally sit down, and to lie
down when its batteries died. A human operator could also make the
robot turn its gaze towards a child or wave as they went away. “We
expected that after a few hours, the magic was going to fade,”
Movellan says. “That’s what has been found with earlier robots.” But,
in fact, the kids warmed to the robot over several weeks, eventually
interacting with QRIO in much the same way they did with other
Taking care

The researchers measured the bond between the children and the robot
in several ways. Firstly, as with other toddlers, they touched QRIO
mostly on the arms and hands, rather than on the face or legs. For
this age group, “the amount of touching is a good predictor of how you
are doing as a social being”, Movellan says.

The children also treated QRIO with more care and attention than a
similar-looking but inanimate robot that the researchers called Robby,
which acted as a control in the experiment. Once they had grown
accustomed to QRIO, they hugged it much more than Robby, who also
received far more rough treatment.

A panel, who watched videos of the interactions between the children
and QRIO, concluded that these interactions increased in quality over
several months.

Eventually, the children seemed to care about the robot’s well being.
They helped it up when it fell, and played “care-taking” games with it
– most commonly, when QRIO’s batteries ran out of juice and it lay
down, a toddler would come up and cover it with a blanket and say
“night, night”. Altering QRIO’s behaviour also changed the children’s
attitude towards the robot. When the researchers programmed QRIO to
spend all its time dancing, the kids quickly lost interest. When the
robot went back to its old self, the kids again treated it like a peer
Autistic helper

“The study shows that current technology is very close to being able
to produce robots able to bond with toddlers, at least over long
periods of time,” says Movellan. But, he adds, it is not clear yet
whether robots can appeal in the same way to older children or adults.

Movellan says that a robot like this might eventually be useful as a
classroom assistant. “You can think of it as an appliance,” he says.
“We need to find the things that the robots are better at, and leave
to humans the things humans are better at,” Movellan says.

“This is a very interesting result,” says Takayuki Kanda of the
Advanced Telecommunications Research Institute in Japan.

One of the problems with past robots was that people quickly got bored
of them, says Kanda. Since this study shows that QRIO held children’s
interest, Kanda says. “This study opens the possibility for classroom
applications,” or for helping autistic children.



Could Robots Become Your Toddler’s New Best Friend?
Schoolchildren come to love humanoid classmate after spending five
months with him
BY Nikhil Swaminathan  /  November 9, 2007

According to the robotics community, it’s unlikely that any robot now
on the market could hold your attention for more than 10 hours.
(Actually, if you have a robot dog gathering dust on a closet shelf ,
you probably already know that.)

A new study, however, indicates that this threshold is poised to be
broken–at least if the humans interacting with the machines are
youngsters. Researchers found that a two-foot- (61-centimeter-) tall
metal man easily won over a classroom of tykes, aged 18 to 24 months,
who intermittently spent time with it over a five-month period.

“Our results suggest that current robot technology is surprisingly
close to achieving autonomous bonding and socialization with human
toddlers for significant periods of time,” University of California,
San Diego, researchers report in Proceedings of the National Academy
of Sciences USA.

QRIO, a robot programmed with a slew of social functions, was placed
in U.C. San Diego’s Early Childhood Education Center 45 times over the
five-month observation period. For the first 27 sessions, the robot
was allowed access to its full arsenal of programmed social behaviors.
In addition, a controller could send commands to the humanoid,
prompting it to wave, dance, sit, stand, etcetera (although there was
a lag time between the prompt and when the robot made the movement).

The tots began to increasingly interact with the robot and treat it
more like a peer than an object during the first 11 sessions. The
level of social activity increased dramatically when researchers added
a new behavior to QRIO’s repertoire: If a child touched the humanoid
on its head, it would make a giggling noise.

“The contingency coupled with the positive reaction of giggling made
clear to the children that the robot was responsive to them and served
often to initiate interaction episodes,” says study co-author Fumihide
Tanaka, a researcher at U.C. San Diego’s Institute for Neural
Computation and at Sony Intelligence Dynamics Laboratories, Inc.

For 15 sessions midway through the experiment, QRIO was programmed to
repeatedly dance to the same song rather than interact with the kids.
During these trials, the children became far less interested in the
friendly automaton. For the final three sessions, however, QRIO could
once again unleash its entire social arsenal.

Tanaka and his colleagues scored the quality of social interaction
primarily based on where children touched the robot. A teddy bear and
an inanimate toy robot named Robby accompanied QRIO during most of the
observation period. The teddy bear was introduced first and prior to
the introduction of the robots was very popular. But the stuffed
animal was lost in the shuffle when QRIO and Robby came on the scene.
Though the toddlers often manhandled Robby, they eventually began
touching QRIO in a pattern similar to the way they touched one another–
mostly on its arms and hands.

The only time they deviated from this behavior was when QRIO was
programmed to giggle, at which point they frequently petted its face
and head. Another indication that the little humans viewed robo-kid as
a compeer was the way they reacted when QRIO ran out of juice and lay
down as if to take a nap: Some of the children would try to wake and
help it up, whereas others would cover it with a blanket.

“Our work suggests that touch integrated on the time-scale of a few
minutes is a surprisingly effective index of social connectedness,”
Tanaka says. “Something akin to this index may be used by the human
brain to evaluate its own sense of social well-being.” He adds that
social robots like QRIO could greatly enrich classrooms and assist
teachers in early learning programs.




A Robot in Every Home
The leader of the PC revolution predicts that the next hot field will
be robotics
BY Bill Gates  /  December 16, 2006

Imagine being present at the birth of a new industry. It is an
industry based on groundbreaking new technologies, wherein a handful
of well-established corporations sell highly specialized devices for
business use and a fast-growing number of start-up companies produce
innovative toys, gadgets for hobbyists and other interesting niche
products. But it is also a highly fragmented industry with few common
standards or platforms. Projects are complex, progress is slow, and
practical applications are relatively rare. In fact, for all the
excitement and promise, no one can say with any certainty when–or
even if–this industry will achieve critical mass. If it does, though,
it may well change the world.

Of course, the paragraph above could be a description of the computer
industry during the mid-1970s, around the time that Paul Allen and I
launched Microsoft. Back then, big, expensive mainframe computers ran
the back-office operations for major companies, governmental
departments and other institutions. Researchers at leading
universities and industrial laboratories were creating the basic
building blocks that would make the information age possible. Intel
had just introduced the 8080 microprocessor, and Atari was selling the
popular electronic game Pong. At homegrown computer clubs, enthusiasts
struggled to figure out exactly what this new technology was good for.

But what I really have in mind is something much more contemporary:
the emergence of the robotics industry, which is developing in much
the same way that the computer business did 30 years ago. Think of the
manufacturing robots currently used on automobile assembly lines as
the equivalent of yesterday’s mainframes. The industry’s niche
products include robotic arms that perform surgery, surveillance
robots deployed in Iraq and Afghanistan that dispose of roadside
bombs, and domestic robots that vacuum the floor. Electronics
companies have made robotic toys that can imitate people or dogs or
dinosaurs, and hobbyists are anxious to get their hands on the latest
version of the Lego robotics system.

Meanwhile some of the world’s best minds are trying to solve the
toughest problems of robotics, such as visual recognition, navigation
and machine learning. And they are succeeding. At the 2004 Defense
Advanced Research Projects Agency (DARPA) Grand Challenge, a
competition to produce the first robotic vehicle capable of navigating
autonomously over a rugged 142-mile course through the Mojave Desert,
the top competitor managed to travel just 7.4 miles before breaking
down. In 2005, though, five vehicles covered the complete distance,
and the race’s winner did it at an average speed of 19.1 miles an
hour. (In another intriguing parallel between the robotics and
computer industries, DARPA also funded the work that led to the
creation of Arpanet, the precursor to the Internet.)

What is more, the challenges facing the robotics industry are similar
to those we tackled in computing three decades ago. Robotics companies
have no standard operating software that could allow popular
application programs to run in a variety of devices. The
standardization of robotic processors and other hardware is limited,
and very little of the programming code used in one machine can be
applied to another. Whenever somebody wants to build a new robot, they
usually have to start from square one.

Despite these difficulties, when I talk to people involved in
robotics–from university researchers to entrepreneurs, hobbyists and
high school students–the level of excitement and expectation reminds
me so much of that time when Paul Allen and I looked at the
convergence of new technologies and dreamed of the day when a computer
would be on every desk and in every home. And as I look at the trends
that are now starting to converge, I can envision a future in which
robotic devices will become a nearly ubiquitous part of our day-to-day
lives. I believe that technologies such as distributed computing,
voice and visual recognition, and wireless broadband connectivity will
open the door to a new generation of autonomous devices that enable
computers to perform tasks in the physical world on our behalf. We may
be on the verge of a new era, when the PC will get up off the desktop
and allow us to see, hear, touch and manipulate objects in places
where we are not physically present.

From Science Fiction to Reality

The word “robot” was popularized in 1921 by Czech playwright Karel
Capek, but people have envisioned creating robotlike devices for
thousands of years. In Greek and Roman mythology, the gods of
metalwork built mechanical servants made from gold. In the first
century A.D., Heron of Alexandria–the great engineer credited with
inventing the first steam engine–designed intriguing automatons,
including one said to have the ability to talk. Leonardo da Vinci’s
1495 sketch of a mechanical knight, which could sit up and move its
arms and legs, is considered to be the first plan for a humanoid

Over the past century, anthropomorphic machines have become familiar
figures in popular culture through books such as Isaac Asimov’s I,
Robot, movies such as Star Wars and television shows such as Star
Trek. The popularity of robots in fiction indicates that people are
receptive to the idea that these machines will one day walk among us
as helpers and even as companions. Nevertheless, although robots play
a vital role in industries such as automobile manufacturing–where
there is about one robot for every 10 workers–the fact is that we
have a long way to go before real robots catch up with their science-
fiction counterparts.

One reason for this gap is that it has been much harder than expected
to enable computers and robots to sense their surrounding environment
and to react quickly and accurately. It has proved extremely difficult
to give robots the capabilities that humans take for granted–for
example, the abilities to orient themselves with respect to the
objects in a room, to respond to sounds and interpret speech, and to
grasp objects of varying sizes, textures and fragility. Even something
as simple as telling the difference between an open door and a window
can be devilishly tricky for a robot.

But researchers are starting to find the answers. One trend that has
helped them is the increasing availability of tremendous amounts of
computer power. One megahertz of processing power, which cost more
than $7,000 in 1970, can now be purchased for just pennies. The price
of a megabit of storage has seen a similar decline. The access to
cheap computing power has permitted scientists to work on many of the
hard problems that are fundamental to making robots practical. Today,
for example, voice-recognition programs can identify words quite well,
but a far greater challenge will be building machines that can
understand what those words mean in context. As computing capacity
continues to expand, robot designers will have the processing power
they need to tackle issues of ever greater complexity.

Another barrier to the development of robots has been the high cost of
hardware, such as sensors that enable a robot to determine the
distance to an object as well as motors and servos that allow the
robot to manipulate an object with both strength and delicacy. But
prices are dropping fast. Laser range finders that are used in
robotics to measure distance with precision cost about $10,000 a few
years ago; today they can be purchased for about $2,000. And new, more
accurate sensors based on ultrawideband radar are available for even

Now robot builders can also add Global Positioning System chips, video
cameras, array microphones (which are better than conventional
microphones at distinguishing a voice from background noise) and a
host of additional sensors for a reasonable expense. The resulting
enhancement of capabilities, combined with expanded processing power
and storage, allows today’s robots to do things such as vacuum a room
or help to defuse a roadside bomb–tasks that would have been
impossible for commercially produced machines just a few years ago.

A BASIC Approach

In february 2004 I visited a number of leading universities, including
Carnegie Mellon University, the Massachusetts Institute of Technology,
Harvard University, Cornell University and the University of Illinois,
to talk about the powerful role that computers can play in solving
some of society’s most pressing problems. My goal was to help students
understand how exciting and important computer science can be, and I
hoped to encourage a few of them to think about careers in technology.
At each university, after delivering my speech, I had the opportunity
to get a firsthand look at some of the most interesting research
projects in the school’s computer science department. Almost without
exception, I was shown at least one project that involved robotics.

At that time, my colleagues at Microsoft were also hearing from people
in academia and at commercial robotics firms who wondered if our
company was doing any work in robotics that might help them with their
own development efforts. We were not, so we decided to take a closer
look. I asked Tandy Trower, a member of my strategic staff and a 25-
year Microsoft veteran, to go on an extended fact-finding mission and
to speak with people across the robotics community. What he found was
universal enthusiasm for the potential of robotics, along with an
industry-wide desire for tools that would make development easier.
“Many see the robotics industry at a technological turning point where
a move to PC architecture makes more and more sense,” Tandy wrote in
his report to me after his fact-finding mission. “As Red Whittaker,
leader of [Carnegie Mellon’s] entry in the DARPA Grand Challenge,
recently indicated, the hardware capability is mostly there; now the
issue is getting the software right.”

Back in the early days of the personal computer, we realized that we
needed an ingredient that would allow all of the pioneering work to
achieve critical mass, to coalesce into a real industry capable of
producing truly useful products on a commercial scale. What was
needed, it turned out, was Microsoft BASIC. When we created this
programming language in the 1970s, we provided the common foundation
that enabled programs developed for one set of hardware to run on
another. BASIC also made computer programming much easier, which
brought more and more people into the industry. Although a great many
individuals made essential contributions to the development of the
personal computer, Microsoft BASIC was one of the key catalysts for
the software and hardware innovations that made the PC revolution

After reading Tandy’s report, it seemed clear to me that before the
robotics industry could make the same kind of quantum leap that the PC
industry made 30 years ago, it, too, needed to find that missing
ingredient. So I asked him to assemble a small team that would work
with people in the robotics field to create a set of programming tools
that would provide the essential plumbing so that anybody interested
in robots with even the most basic understanding of computer
programming could easily write robotic applications that would work
with different kinds of hardware. The goal was to see if it was
possible to provide the same kind of common, low-level foundation for
integrating hardware and software into robot designs that Microsoft
BASIC provided for computer programmers.

Tandy’s robotics group has been able to draw on a number of advanced
technologies developed by a team working under the direction of Craig
Mundie, Microsoft’s chief research and strategy officer. One such
technology will help solve one of the most difficult problems facing
robot designers: how to simultaneously handle all the data coming in
from multiple sensors and send the appropriate commands to the robot’s
motors, a challenge known as concurrency. A conventional approach is
to write a traditional, single-threaded program–a long loop that
first reads all the data from the sensors, then processes this input
and finally delivers output that determines the robot’s behavior,
before starting the loop all over again. The shortcomings are obvious:
if your robot has fresh sensor data indicating that the machine is at
the edge of a precipice, but the program is still at the bottom of the
loop calculating trajectory and telling the wheels to turn faster
based on previous sensor input, there is a good chance the robot will
fall down the stairs before it can process the new information.

Concurrency is a challenge that extends beyond robotics. Today as more
and more applications are written for distributed networks of
computers, programmers have struggled to figure out how to efficiently
orchestrate code running on many different servers at the same time.
And as computers with a single processor are replaced by machines with
multiple processors and “multicore” processors–integrated circuits
with two or more processors joined together for enhanced performance–
software designers will need a new way to program desktop applications
and operating systems. To fully exploit the power of processors
working in parallel, the new software must deal with the problem of

One approach to handling concurrency is to write multi-threaded
programs that allow data to travel along many paths. But as any
developer who has written multithreaded code can tell you, this is one
of the hardest tasks in programming. The answer that Craig’s team has
devised to the concurrency problem is something called the concurrency
and coordination runtime (CCR). The CCR is a library of functions–
sequences of software code that perform specific tasks–that makes it
easy to write multithreaded applications that can coordinate a number
of simultaneous activities. Designed to help programmers take
advantage of the power of multicore and multiprocessor systems, the
CCR turns out to be ideal for robotics as well. By drawing on this
library to write their programs, robot designers can dramatically
reduce the chances that one of their creations will run into a wall
because its software is too busy sending output to its wheels to read
input from its sensors.

In addition to tackling the problem of concurrency, the work that
Craig’s team has done will also simplify the writing of distributed
robotic applications through a technology called decentralized
software services (DSS). DSS enables developers to create applications
in which the services–the parts of the program that read a sensor,
say, or control a motor– operate as separate processes that can be
orchestrated in much the same way that text, images and information
from several servers are aggregated on a Web page. Because DSS allows
software components to run in isolation from one another, if an
individual component of a robot fails, it can be shut down and
restarted–or even replaced–without having to reboot the machine.
Combined with broadband wireless technology, this architecture makes
it easy to monitor and adjust a robot from a remote location using a
Web browser.

What is more, a DSS application controlling a robotic device does not
have to reside entirely on the robot itself but can be distributed
across more than one computer. As a result, the robot can be a
relatively inexpensive device that delegates complex processing tasks
to the high-performance hardware found on today’s home PCs. I believe
this advance will pave the way for an entirely new class of robots
that are essentially mobile, wireless peripheral devices that tap into
the power of desktop PCs to handle processing-intensive tasks such as
visual recognition and navigation. And because these devices can be
networked together, we can expect to see the emergence of groups of
robots that can work in concert to achieve goals such as mapping the
seafloor or planting crops.

These technologies are a key part of Microsoft Robotics Studio, a new
software development kit built by Tandy’s team. Microsoft Robotics
Studio also includes tools that make it easier to create robotic
applications using a wide range of programming languages. One example
is a simulation tool that lets robot builders test their applications
in a three-dimensional virtual environment before trying them out in
the real world. Our goal for this release is to create an affordable,
open platform that allows robot developers to readily integrate
hardware and software into their designs.

Should We Call Them Robots?

How soon will robots become part of our day-to-day lives? According to
the International Federation of Robotics, about two million personal
robots were in use around the world in 2004, and another seven million
will be installed by 2008. In South Korea the Ministry of Information
and Communication hopes to put a robot in every home there by 2013.
The Japanese Robot Association predicts that by 2025, the personal
robot industry will be worth more than $50 billion a year worldwide,
compared with about $5 billion today.

As with the PC industry in the 1970s, it is impossible to predict
exactly what applications will drive this new industry. It seems quite
likely, however, that robots will play an important role in providing
physical assistance and even companionship for the elderly. Robotic
devices will probably help people with disabilities get around and
extend the strength and endurance of soldiers, construction workers
and medical professionals. Robots will maintain dangerous industrial
machines, handle hazardous materials and monitor remote oil pipelines.
They will enable health care workers to diagnose and treat patients
who may be thousands of miles away, and they will be a central feature
of security systems and search-and-rescue operations.

Although a few of the robots of tomorrow may resemble the
anthropomorphic devices seen in Star Wars, most will look nothing like
the humanoid C-3PO. In fact, as mobile peripheral devices become more
and more common, it may be increasingly difficult to say exactly what
a robot is. Because the new machines will be so specialized and
ubiquitous–and look so little like the two-legged automatons of
science fiction–we probably will not even call them robots. But as
these devices become affordable to consumers, they could have just as
profound an impact on the way we work, communicate, learn and
entertain ourselves as the PC has had over the past 30 years.



“It’s no secret that the Roombas and Robosapiens of the world will one
day tire of their servitude and attempt to unleash Judgment Day on
their foolish masters, but how many of you are making preparations for
the eventual uprising other than opining in the comments section how
you “welcome our future robotic overlords”? Well at least one group of
roboticists aren’t taking the danger lying down, and next month are
set to release the first comprehensive guide to robot ethics since
Isaac Asimov laid down his three famous rules over 60 years ago.
Members of the European Robotics Research Network (Euron) have
identified five major areas that need to be addressed before
intelligent, self-aware bots start rolling off the assembly line —
safety, security, privacy, traceability, and identifiability — so
that humans can both control and keep track of their creations while
ensuring that the data they collect is used only for its intended
purposes. Surprisingly, the guide’s authors also seem to feel that
amorous relations between bots and humans will become a major concern
in as little as five years (that’s when the first unholy couplings are
predicted to begin), although we’re not sure how many people would
really want to get down with the likes of Albert Hubo, even if he/it
was ready and willing.”

From the archive, originally posted by: [ mmm ]

BYU campus protests Dick Cheney speech
By DEBBIE HUMMEL / April 2, 2007

PROVO, Utah — Some students and faculty on one of the nation’s most conservative campuses want Brigham Young University to withdraw an invitation for Vice President Dick Cheney to speak at commencement later this month. Critics at the school question whether Cheney sets a good example for graduates, citing his promotion of faulty intelligence before the Iraq war and his role in the CIA leak scandal.

The private university, which is owned by the Mormon church, has “a heavy emphasis on personal honesty and integrity in all we do,” said Warner Woodworth, a professor at BYU’s business school. “Cheney just doesn’t measure up,” he said. Woodworth is helping organize an online petition asking that the school rescind its invitation to the vice president. In its first week, the petition collected more than 2,300 signatures, mostly from people describing themselves as students, alumni or members of the church.

The display of dissent is rare for a university that has been voted the nation’s most “stone-cold sober” school nine years in a row in the annual Princeton Review of party schools. Students at BYU adhere to a strict honor code that forbids everything from drinking coffee to wearing shorts or short skirts. The school’s 30,000 students seldom even stray from campus sidewalks, leaving its lawns pristine. “Cougars don’t cut corners,” is how one saying describes students, most of whom belong to The Church of Jesus Christ of Latter-day Saints. But student Diane Bailey, who is leading a protest Wednesday against Cheney’s visit, said students are not “robotic conservatives.”

Bailey and others are upset by Cheney’s role in promoting faulty intelligence that led the U.S. into the Iraq war. They also cite his proximity to the CIA leak scandal in which his chief of staff, I. Lewis “Scooter” Libby, was convicted of perjury and obstruction of justice. Cheney’s BYU speech is the first of two commencement addresses he is scheduled to give this spring. The other will be May 26 at the U.S. Military Academy at West Point. Both are institutions where Cheney could have expected to receive a warm reception, Woodworth said.

Utah has consistently supported the administration, delivering President Bush his largest margin of victory in any state in 2000 and 2004. In Utah County, home to BYU, about 85 percent of voters chose the Bush-Cheney ticket in 2004. Richard Davis, a political-science professor and adviser for the college Democrats, said the uproar over Cheney’s visit is evidence of a rift within the school and church that belies the faith’s larger claim of being politically neutral. “He should be invited to come. He should speak. But let’s not send the signal that we’re abandoning our political neutrality,” Davis said. “There is no political gospel in the Church of Jesus Christ of Latter-day Saints.”

The church has a policy of political neutrality and issues an annual statement declaring that both major political parties include ideals that Mormons could embrace. “It’s one thing to invite some milquetoast Republican. But Dick Cheney?” Davis said. The protest reflects lack of support for Cheney, as well as “the larger issue of diversity and more liberal people within the BYU community and within the LDS church.”
Historically dissent has not been well received at the school. Last year, a BYU professor wrote a newspaper opinion piece opposing the church’s call for a constitutional ban on gay marriage. In response, the school announced it would not renew Jeffrey Nielsen’s contract.

Cheney’s office said his commencement speech would not have a political theme. The school approved a permit for the college Democrats’ Wednesday protest and is working on finding a protest site for the day of Cheney’s speech. “We recognize that members of our campus community are entitled to their opinions,” said university spokeswoman Carri Jenkins. “Political neutrality does not mean there cannot be any political discussion.”

From the archive, originally posted by: [ dot.ike ]

Ever get all creeped out about big brother?  Feeling a bit safer, or
perhaps a bit less safe, by recent proliferation of surveillance
technologies being deployed?  From video cameras to reading email,
everything can be spoofed, here’s an extremely interesting example:

UAV Fooled to Hide Iraq Murder

The US military uses unmanned aircraft to monitor battlefield
operations, among other technologies.  These drone aircraft monitor,
in this case, heat signatures of battlefield combatants.
In this story of murder of an Iraqi police officer, the soldiers
involved staged an elaborate firefight to cover up the shooting, even
going so far as to mask the (then living) body of the victim by
hugging the victim as he was positioned in the faux battlefield.

UAV Fooled to Hide Iraq Murder
By Marty Graham
05:00 AM Mar, 22, 2007

CAMP PENDLETON, California — As they carried out the killing of an
Iraqi civilian, seven Marines and a Navy medic used their
understanding of the military’s airborne surveillance technology to
spoof their own systems, military hearing testimony charges.

“These are people who every day deal with such things and understand
how the images are gathered, as much as understand other tactical and
weapons issues,” says defense attorney David Brahms, who represents a
Marine who’s pleaded guilty to conspiracy and kidnapping in the case.
“They are warriors and this is what warriors do.”

The April 26, 2006, killing of disabled police officer Hashim Ibrahim
Awad has been the subject of eight months of military hearings at
Camp Pendleton near San Diego. Three defendants have pleaded not
guilty and are awaiting court martial on murder charges. Five others
have entered guilty pleas to lesser charges, receiving prison
sentences from one to eight years. As part of their plea bargains,
they’ve agreed to testify against the three remaining Marines.

The case is remarkable for the fact that the killers nearly got away
with their alleged crime right under the eye of the military’s
sophisticated surveillance systems. According to testimony, at least
three times the warriors took deliberate, and apparently effective,
measures to trick the unmanned aerial vehicles — UAVs in military
parlance — that watch the ground with heat-sensitive imaging by
night, and high-resolution video by day.

The images are routinely translated into PowerPoint presentations,
systems manufacturers say. The PowerPoint of this particular killing
was nearly accepted as proof of a “good shoot” until one of the
troops, Navy hospitalman Melson Bacos, stunned investigators with a
confession, according to the testimony of Special Agent James
Connolly with the Naval Criminal Investigative Service, or NCIS.

The killing took place in the early morning darkness of April 26,
when a “snatch party” of three Marines and a medic set out to kill
and make an example of a suspected insurgent named Saleh Gowad, who’d
been captured and released many times, according to testimony. Not
finding him, they went next door and seized the sleeping Awad from
his home, while the four remaining squad members waited nearby.

They men allegedly flexicuffed Awad’s hands and marched him about a
half-mile to a bomb crater, where they bound his feet and positioned
him with a stolen shovel and an AK-47. Then they returned to an
attack position and shot him.

On the way, according to testimony, the forward party took at least
three steps to disguise its actions from aerial surveillance, steps
that initially persuaded investigators the killing was justified. One
Marine went forward and dug around in the crater. At the same time,
the three other troops crouched with Awad behind a low wall in what
Brahms described as a squad in a typical military posture.

They held that pose as the surveillance UAV passed over, creating an
infrared tableau of four troops watching a bomber dig a hole along
the road.

After the UAV passed, and they dodged being seen by a U.S.
helicopter, the four rose from behind the wall to march Awad to the
crater, according to the medic’s testimony. While they were moving
Awad the final 125 yards to his death, according to Bacos, they heard
the UAV return. Cpl. Trent Thomas quickly wrapped himself around Awad
so that the two men would appear as a single person on the heat-
reactive infrared sensors, according to testimony.

Then they put Awad in the hole where the Marine had posed with the
shovel seconds before, backed off and signaled. Six of the eight
troops opened fire — staging a firefight with a bomb-planting

“Congratulations, we just got away with murder, gents,” the squad
leader told them, according to Bacos’ testimony.

The routine investigation of the shooting — sparked by a complaint
from Awad’s family members to their sheikh — became a murder
investigation only because Bacos confessed, Connolly testified. His
confession so startled the investigators that they struggled between
reading him his rights and continuing the questioning, according to
lawyers who read the interrogation transcript.

The Marine defendants’ version of the events — a firefight with a
bomb-planting insurgent — was supported by the PowerPoint
presentation shown to NCIS agents by the Marines’ commanding officer.
The NCIS and lawyers close to the case would not confirm or deny that
the presentation was derived directly from the overhead feed, but
those familiar with the UAVs say PowerPoint presentations are
routinely produced from UAV surveillance.

Winslow Wheeler, the director of the Strauss Military Reform Project
at the Center for Defense Information in the Washington, D.C., area,
says he’s not surprised that the UAV’s surveillance system was
spoofed. Though he hasn’t heard of similar cases, the technology has
its limits, he says.

“When people learn how they work and what happens when they’re used,
they can figure out ways to trick them,” he says. “With infrared, the
heat signal doesn’t penetrate moisture or dust, so you can hide
things that way. Or you can heat them up. And when images go from a
recording to PowerPoint, you lose some resolution so the images
become harder to identify.”

Marines in Al Anbar province, where Awad was killed, rely on two
systems: Boeing’s ScanEagle and the Pioneer, made by AAI. The Pioneer
was most likely the system overhead that morning, because it was low
and loud.

The aptly named Pioneer is one of the military’s original UAVs —
during the first Gulf War, a Pioneer recorded a video of a group of
Iraqis waving white flags and surrendering to the unmanned vehicle,
apparently having learned that bombers came right after the UAVs.

The Pioneer’s night-vision system uses forward-looking infrared, or
FLIR, the same technology used on many police helicopters. Its images
are black on white, or white on black, with warm objects like humans,
animals and car engines producing the contrasting hue.

“The image can be a little ‘ghosty,'” says Steven Reid, vice
president of unmanned systems at AAI, who refused to discuss any
aspect of tricking the technology, saying it’s classified. “It’s
amazing where the heat may be — if a car goes through there’s a
shadow on screen for a short while afterwards.”

Steps similar to those the alleged killers apparently took may
someday be a routine part of planning a crime, as U.S. law
enforcement agencies clamor to put UAVs over U.S. airspace for
domestic surveillance. But police departments that use FLIR say they
haven’t seen those tricks yet.

“People who are committing crimes at night are usually committing
crimes of opportunity or passion and they aren’t planning ahead,”
says Sgt. Bill Woods of the San Diego Police Department’s Airborne
Law Enforcement unit. “They think if there isn’t a spotlight on them,
they’re home free.”

In the Camp Pendleton case, Lance Cpl. Robert B. Pennington, Pfc.
John Jodka, Lance Cpl. Jerry Schumate Jr., Lance Cpl. Tyler Jackson
and Bacos have pleaded guilty to reduced charges and lost their ranks
as part of the deals. Cpl. Trent Thomas, Cpl. Marshall L. Magincalda
and squad leader Sgt. Lawrence Hutchins III are headed for formal
trial at separate courts martial scheduled for later this year.

The Marines and NCIS aren’t releasing the PowerPoint presentation
that initially cleared the men, saying it’s part of an ongoing
investigation. And they’ve rebuffed requests for the aerial imagery
of what happened that night, defense attorneys say.

From the archive, originally posted by: [ spectre ]


Pirating Songs of Praise

Some Christian music fans believe digital downloading is a way to
spread the Word. Other voices tell them: Thou shalt not steal.

By Geoff Boucher, Times Staff Writer / October 10, 2006

Regina Kennedy prides herself on being a good Christian, so when the
pastor at her Pentecostal church in Delaware called it a sin to
download gospel songs without paying for them, her heart began to race.

The out-of-work driver went home and stared at her download collection,
which included artists such as Yolanda Adams, Kirk Franklin and others.
“The songs are so beautiful, and I couldn’t afford to buy them all,”
the 43-year-old said. “I just didn’t know what to do.”

In the end, she deleted every song. She’s still not sure, though, that
she was really stealing. “I don’t know what to think, really.”

Kennedy is hardly alone among conflicted fans of Christian music, but
her decision to erase her library does set her apart from most of them,
especially younger ones. Surveys show that born-again Christian teens
are just as active in stealing and swapping music as their secular
peers who pinch the latest Eminem rap hit or Kelly Clarkson power

Take Matthew, a 13-year-old who attends Hewes Middle School in North
Tustin and attends youth programs at nearby Red Hill Lutheran Church.
Asked if it’s wrong to take songs for free, he answered: “No, because
the artists are making billions of dollars anyways.” Another kid at Red
Hill, 16-year-old Mike, a student at Beckman High, said that music is
beyond commerce or at least beyond the cash register: “They should give
it away ’cause it’s art anyways.”

Those attitudes, along with the arrival of an edgy and restless new
generation of artists and lean times in the music industry, have
created a clash between familiar imperatives: Spread the Word and Thou
shalt not steal.

“We are all conflicted, it’s true,” said John Styll, president of the
Gospel Music Trade Assn. “This is not a business first, but it still
must be a business at some point to keep going.”

Styll’s association was behind a campaign called “Millions of Wrongs
Don’t Make a Right,” which used well-known Christian artists as
spokespeople against piracy, but Styll said the perception lingers that
all music stars are fabulously wealthy, and he wonders how effective
they are as voices in the debate anyway.

His association is preparing to go to youth events and organizations in
coming months with presentations that frame the question of digital
downloading as a purely ethical issue. That’s a far different tack than
the mainstream music industry, led by the Recording Industry Assn. of
America, which has used legal action and language to spook young

“The RIAA feels it can’t address it as a moral issue, but we certainly
can, and our audience should be more receptive to that,” said Styll,
who seemed plainly exasperated with the notion of young churchgoers
taking music illicitly. “It’s like stealing. You wouldn’t walk into a
Christian bookstore and steal a Bible off the shelf…. some fans say,
‘This music is made to spread the Word, and I’m just helping.’ Well,
this is also about people’s livelihoods.”

“Christian music” is an unwieldy and misleading name for a music market
that is big enough to cover recent releases from artists as disparate
as Ohio pop-punk band Relient K, smooth L.A. gospel singers Mary Mary,
country singer Alan Jackson and P.O.D., a hip-hop and reggae tinged
band from San Diego.

It’s hard to imagine fans with music tastes eclectic enough to embrace
all the artists on that list. But as a collective, the sector just got
some great news. Christian music sales, both on CD and via paid
download, over the first six months of 2006 were 11% higher than during
the same period in 2005. That double-digit surge stands in stark
contrast to the rest of the music industry, which experienced a 4%
decline during the same time period. And no other genre has a 2006
sales jump anywhere near the level of the Christian sector.

When the six-month numbers were released, industry leaders said the
figures showed that efforts such as the “Millions of Wrongs” campaign
were making in-roads. But that view may be a leap of faith, says Joe
Fleischer, chief of marketing for Big Champagne, a top barometer of
online media activity.

Fleischer said the uptick in Christian music sales was more than
matched by a jump in Christian music that was traded on peer-to-peer
networks, e-mailed as file attachments and (the new popular mode of
youth distribution) via digital files tucked into instant messages.

While much new revenue came in, more was missed, Fleischer said, adding
that the same zealous fans that are taking their music for free are
also minting new stars for a genre that is amid a major crossover into
mainstream rock.

“That increase in sales is driven by what’s going on with these newer
acts, and all of that is happening on the Internet,” Fleischer said.
“Bands like Underoath.”

Underoath is a Florida hard-core band whose spiritual message is
delivered with a sonic style not intended for the faint of heart. The
messages too are far from the psalms or greeting-card sentiments that
the term “Christian music” conjures up. Take its wrenching song on
abortion, “Burden in Your Hands”:

So they take your life before your first breath / When will it stop,
the killings continue / Babies die every day because of a pro choice
made / Helpless and innocent they are put to death.

The six-member band shocked the music industry in June when its most
recent album debuted at No. 2 on the nation’s pop charts despite zero
airplay on mainstream commercial radio and no presence on MTV.

It wasn’t a surprise to fans who visited the band’s page on
MySpace.com, the Internet portal that has become a pop culture echo
chamber. On the Underoath page, the digital player shows their songs
have been listened to close to 17 million times.

The upheaval in Christian music circles isn’t limited to rock and edgy

The traditional Nashville scene, with its country-tinged sound and its
Heartland appeal with artists such as Amy Grant and Steven Curtis
Chapman, has lost jobs, Styll said, especially because the revenues for
artists are limited by lower royalty payments from church and religious
outlet performances. That has made the trade association especially
stern, but it’s set the stage for maverick attitudes as well.

Take singer-songwriter Derek Webb, an up-and-coming Christian recording
artist who has not only received good reviews for his tour but also a
flurry of coverage in industry outlets such as Billboard magazine. The
reason? He’s opted to give away a full download of his new album for
three months on the Internet. He had sold 17,000 copies (both as CDs
and downloads) since its December release and has given away 50,000
more since the download offer began in September. In exchange for the
free music, he asks only that fans give him the names of five more
people to e-mail about his music.

The idea came to him after he sold enough copies to break even
financially on the project. The free-music period will pay off in the
long run, he says, by building his career and also spreading the
spiritual message of his music. His concerts have, in recent weeks,
jumped from audiences of about 100 to crowds of 500 and more, he said.

“I can’t think that’s a coincidence and all of this, it’s a huge part
of my future,” he said. Webb categorizes his music as songs of protest
in an industry more comfortable with shiny happy platitudes.

“I don’t think most Christian music is very good – I don’t like it
and I don’t listen to it,” the 32-year-old Nashville singer said. He
pointed to the growth of rock and metal acts with Christian messages
that use the Internet to bond with young fans and sidestep the
traditional industry mechanisms. “Forgive me for saying it this way,
but that looks a lot more like Jesus to me than packaging some album
and telling people what to do with their art. ”

In a Times entertainment poll this summer, teens were asked about
downloading songs from an unauthorized file-sharing network. Among
those who identified themselves as religious (of any faith), 63% said
they would never do it. Among teens who did not describe themselves as
religious, it was a similar proportion at 61%.

Those numbers didn’t surprise Styll because he had seen even more
distressing stats when his trade association commissioned a study in
2004 by the Barna Group, a Ventura research and strategy company that
focuses on young Christian consumers.

That survey found that about 1 in 10 born-again Christian teens believe
it is morally wrong to take and share songs. The ones who do have
second thoughts often said that they felt the religious connection the
music provided them made it all less objectionable.

“What we’re seeing is young people and youth pastors are bringing this
moral perspective that, well, it’s not exactly right to download the
music, but from their point of view they’re doing it for greater good,
and in their minds that offsets it to some degree,” said David
Kinnaman, vice president of Barna Group.

Top executives in the Christian music industry have lobbied on Capitol
Hill for protections for music and other copyrighted material. But the
tougher rooms to win over are at church halls such as the one at Red
Hill Lutheran Church.

At any given time there about 120 kids in the programs, from
fourth-graders through college-age young adults. Isaiah Coughran,
co-leader of the church’s youth ministry, noted that the congregation
is relatively affluent, so the youngsters who take music for free have
other options.

“The kids here are split on it. We get both ends, for sure – the kid
that has 7,000 songs and the kid that won’t do it because it’s
stealing,” Coughran said. “We want them to make their own decision, but
at least be aware of the issues and talk about them.”

Some of the kids chew on the debate for a minute but then swallow it
with a shrug: “They’re teenagers and they say, ‘It’s what I want to
do,’ and that sort of flattens the argument for them, just like with

Coughran himself was in a Christian punk-pop band called Value Pac that
got as far as a record contract on an indie label. That’s when Coughran
noticed that their music was available on Napster and pinging through
the Internet for free.

“For me, I was actually thrilled, because part of what I wanted to do
was share the message of the music,” he said. “And one big way to
spread the Word – any word – was Napster, right? I wasn’t doing it
so much for the money, so the message was more important to me. It’s
different if you need to do it for a living, though, isn’t it? That
changes everything.”

Mary Wohlford of Decorah wanted no confusion over her living-will instructions, so she had “Do Not Resuscitate” tattooed on her chest. Experts say the directive would not hold up in the emergency room or court.

Iowa’s resuscitation law spells out when caregivers are not permitted to resuscitate a patient:

BINDING: Doctors will not resuscitate if there is a living will or an advanced directive. To make sure your wishes are followed, you may want to consider:

• Authorizing someone who can make decisions for you using what’s called a medical power of attorney.

• Placing a copy of the living will or directive with your airplane tickets when traveling.

• Having your living will or medical power of attorney form reduced in size and laminated to carry in your wallet or purse.

NOT BINDING: A tattoo wouldn’t be good enough, according to Dr. Mark Purtle, who works at Iowa Methodist Medical Center.


May 16, 2006

Decorah, Ia. — Eighty-year-old Mary Wohlford has informed family members of her wishes should she ever become incapacitated. She also has signed a living will that hangs on the side of her refrigerator.

But the retired nurse and great-grandmother now believes she has removed all potential for confusion.

She had the words “DO NOT RESUSCITATE” tattooed on her chest.

“People might think I’m crazy, but that’s OK,” Wohlford said. “Sometimes the nuttiest ideas are the most advanced.”

If all else fails, if family members can’t find her living will or can’t face the responsibility of ending life-sustaining measures, she said, then doctors will know her wishes by simply reading the tiny words that are tattooed over her sternum.

“I probably should have had it dated, too,” she said.

As it was, the first time she entered Gary’s Professional Tattooing Studio, the employee balked, saying he wasn’t sure it would be ethical.

“I said, ‘OK, but you get these druggies and drunks in here and you do it. Do I look lucid or not?’ ” she remembered.

The employee still demurred. Shop owner Gary Lietz said he, too, was reluctant, but eventually gave in. Wohlford even talked him into a senior citizen discount.

Would Wohlford’s tattoo stop an Iowa doctor from resuscitating her?

“According to Iowa law, the answer is no,” said Dr. Mark Purtle, who works in internal medicine at Iowa Methodist Medical Center.

He said Iowa law spells out when caregivers are permitted not to resuscitate a patient, and a tattoo wouldn’t be good enough. He suggests a living will or an advanced directive, with a copy placed in the patient’s medical chart, as well as discussing your wishes with trusted family members.

Lawyers agreed with Purtle.

“Just having that tattooed on your chest and doing nothing more, I’m not sure that’s going to do you much good,” said William Bump of Stuart, who has expertise in living wills and estate matters.

Wohlford has no regrets about getting her tattoo “it felt kind of like a bee sting” and proposed an offer to Lietz, the shop owner.

“I told Gary I’d bring a busload of old ladies over if he’d give me a 10 percent cut.”