Why The Human Brain Loves To Be Lied To

Joe Weisenthal (0:09)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:13)

And I'm Tracy Alloway.

Joe Weisenthal (0:15)

Hi, Tracy.

Hi, Joe. We're in the same room together.

Tracy Alloway (0:19)

I know, and I'm looking at you while I say hello, which is different to what we normally do, but it's nice to see you in person again.

Joe Weisenthal (0:25)

Absolutely. Okay, so we're not talking about poker on this episode.

Tracy Alloway (0:30)

No, I love poker and chess, anything else that you love.

Joe Weisenthal (0:33)

We're not talking about poker on this episode, but remember a couple weeks ago when we talked to Annie Duke, the former professional poker player?

Tracy Alloway (0:41)

Of course.

Joe Weisenthal (0:41)

One of our best episodes, I think, in a while.

And of course, her whole thing, and she has this new book out called Thinking in Beds. And one of her big ideas that she talked about was that to be successful in poker or trading, which is particularly relevant to us, people have to not get attached to certain ideas. They have to be willing to discard things that are wrong, which is very tough for people.

Tracy Alloway (1:08)

Yeah, there's a lot of confirmation bias in trading, and people kind of refuse to let go of trades that are going the wrong way, right? Because they think it'll come back eventually.

Joe Weisenthal (1:17)

They really want to be right, or they want to fit a market move into some existing worldview and really jam it in.

Tracy Alloway (1:24)

Yeah.

Joe Weisenthal (1:25)

And okay, so we say all that, we're like, oh, people do this, and I think that's pretty easy for people to accept.

But it raises the question of why we do this. Why is it so hard for us to update our beliefs when new facts emerge? Or why are we so interested in coming up with an idea and fitting it into an ideology or worldview, even if it doesn't fit?

Tracy Alloway (1:46)

Yeah. Why are we seemingly, incontrovertibly forever doomed to repeat this one mistake?

Joe Weisenthal (1:53)

And why do we hate the truth, right?

Tracy Alloway (1:55)

Yeah. Yes.

Joe Weisenthal (1:57)

So today we're going to try to answer that question. Why we hate the truth, why we all hate facts, and why this makes us all bad traders or public players.

Tracy Alloway (2:06)

Who are we talking to on this one?

Joe Weisenthal (2:08)

So I'm very excited. I came across this paper the other day. It's called The Partisan Brain, An Identity-Based Model of Political Belief. And it talks about various explanations for this phenomenon of our brains rejecting truth. And we have one of the authors, Jay Van Bavel. He is a professor at NYU. And he's going to walk us through some of his research. What does he learn? Specifically, he's an associate professor of psychology and neuroscience at New York University.

Tracy Alloway (2:37)

So he's going to explain to us why we like lies.

Joe Weisenthal (2:39)

Why we like lies. Exactly.

Tracy Alloway (2:40)

Let's do it.

Joe Weisenthal (2:46)

Jay Van Bavel, thank you very much.

Jay Van Bavel (2:48)

Thanks for having me.

Joe Weisenthal (2:51)

Do we just all hate the truth?

Jay Van Bavel (2:53)

Sometimes we love the truth. It really hinges on what our goals are. If we're looking for accuracy, and that's part of our identity, then we look to seek out evidence that we might be wrong, or at least verification that we know what we believe.

And if we are motivated by other goals, for example, if we have a commitment to a political belief or a political party, we might be compelled to believe them and ignore facts that contradict that particular identity.

Joe Weisenthal (3:24)

So I set it up, obviously, within the context of Odd Lots. We talk about markets and trading. The paper itself, though, is about, as the title says, the partisan brain.

My intuition and my sense is that a lot of what you've studied about how political ideologues see the world has applicability to the realm of trading and other areas. But just sort of give us the overview of what this paper tried to show.

Jay Van Bavel (3:49)

So what this paper tries to do is bridge research in political science, which is about political parties and ideologies, with research in psychology. So what types of things motivate us to engage in certain behaviors or hold certain beliefs, as well as neuroscience. So we looked inside the brain and tried to get a handle on if you're being biased in some way by some commitment to an identity or a political party.