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Does Irrationality Fuel Innovation?

• georgewsinger 6y ago
  I've heard it rumored that one of Peter Thiel's private beliefs is that tech bubbles are necessary to fund non-trivial innovation in new industries (when expected value to investors is largely negative). This is a fascinating question either way.
  • chrisco255 6y ago
    If that's true then why does Peter constantly argue that we haven't seen much innovation in the last 50 years? We've certainly had plenty of bubbles.
    • beambot 6y ago
      Insufficient irrationality?
    • exolymph 6y ago
      https://en.wikipedia.org/wiki/Leo_Strauss https://en.wikipedia.org/wiki/Leo_Strauss
    • dlkf 6y ago
      I don't have a dog in this fight but it's worth noting OP said "necessary" and not "sufficient."
    • twic 6y ago
      He has a portfolio of beliefs. All of them are bold, and not all of them have to be true!
  • lachlan-sneff 6y ago
    This is absolutely true.
  • api 6y ago
    I basically agree with him but I'd put it a bit differently: non-trivial innovation requires something able to burn money on it beyond the constraints of rational short to medium term profit motive. That could be a bubble that throws off so much surplus money that some of it gets spent on things that end up "failing" but generating a return in the long term. It could also be large government R&D expenditures, and that's indeed what it was through the most innovative period of the 20th century. Lastly it could be a massive cash cow monopoly like Ma Bell and its Bell Labs, but that usually overlaps a bit with government since usually those kinds of monopolies exist because of some form of government action in the marketplace.
• aaron695 6y ago
  I think most people have group think. To not have group think is considered 'irrationality' since most people don't think the person is correct. So perhaps you are playing with words. I wouldn't have thought a large company just ignoring local laws could use this as a driving tactic to win a world market. But I think that was my group think over their irrationality.
• sandwall 6y ago
  Risk aversion is rational behavior. However, it's not irrational concepts that succeed; rather, rational ideas that are counter-intuitive.
• js8 6y ago
  My belief is yes, and this is just my opinion. I think startup founders are irrational, crazy optimistic, because the odds of making it compared to the effort put in are completely off. But they get to do what they enjoy, perhaps for a while. This is possibly even more true for the employees in such companies. Rational people go into corporations, and get an MBA, which is at its core a course in (economic) rationality. And the result of this rationality is bottom line is everything, even if it means to suck the soul out of everything or even shrinking the company, or even destroying the Earth. I admit, I despise (economic) rationality. Rationality is only ever reactive, it cannot give you a goal, or a vision. It cannot give society any values. The values or goals have to be irrational, by definition. There are some nice examples from game theory underlying this, but probably the best is Varoufakis' story about students of economics and business he taught. When Yanis came to his game theory class, he gave a proposal to students, instead of them having to work and getting a mark for the course based on their knowledge, the students would just secretly vote on what mark they should get and they would all get the minimal mark anybody voted for. But the proposal would only be implemented if all the students agree. Inevitably, there were some people against this. Later Yanis asked these students in private, why did they vote against the proposal, they could certainly save themselves a lot of effort! They always, and without any hint of irony, told him that they believe there would be some idiot who would irrationally put in a bad mark. The irony being, of course, it was them, who was irrational! I think this story beautifully underlies the futility of the quest for ultimate rationality. And I find it hilarious that while free market ideology touts rationality as the ultimate goal, the reality of capitalism is that it actually requires people to create startups and small businesses, which is inherently irrational behavior.
  • perl4ever 6y ago
    You misrepresent economic rationality, which is not defined based on some particular accounting standards. You also sound like you've read enough to know better. It sounds to me like your problem is other people don't share your values, and you are calling this "rationality", whereas other people have the same issue, but often call it "irrationality". Yet you are saying at the same time that rationality is orthogonal to values. If so, then it doesn't oppose them. It all seems incoherent yet cliched to me.
• rstuart4133 6y ago
  A quote from George Bernard Shaw (some would say insisting people use your middle name is unreasonable): “The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” Irrationality is just an extreme form of being unreasonable, is it?
  • aaron-lebo 6y ago
    I guess the issue is that it's really difficult to draw the line between being unreasonable or even momentarily irrational and just being delusional. It's hard to admit to yourself that you're delusional, so that quote, which gives lots of people comfort and seems attractive in some ways, probably leads a lot of people down paths which have no possible return - or delusion, and it can destroy their lives and others (like this current crisis). To get back to the article, yeah, some irrationality is probably necessary, because it takes irrational (unreasonable) people believing they can do things other people gave up on. But the important thing is probably being aware that you can be unreasonable and not letting that drive. There's a book, Becoming Steve Jobs, that is probably my favorite Jobs bio, because it's really about him learning to mitigate those flaws and becoming better in his second go around because of it. Steve was certainly delusional at times, and he shouldn't have been encouraged. You know, like denying the paternity of your child. Steve really personally hurt himself and others because of that kind of irrationality and it wasn't a positive in that context. I think there are a lot of other people that do some really kind of delusional stuff, but we accept that because they are successful. You know, like Musk slurring an innocent person (or being really premature on every self-imposed deadline, or Holmes being a complete fraud. I've got no doubt that given enough time the latter probably would have figured out enough to pull half of a rabbit out of a hat to prove to people they had it all figured out, but it doesn't mean they weren't delusional, and it doesn't mean that that's healthy for them or us as societies to encourage lying to yourself and others, even if sometimes you get lucky. Guess I'm just complaining. I see genuinely crazy stuff posted on HN and other places and to me irrationality isn't sexy, it's something that we need to do a better job of being honest about.
    • philipov 6y ago
• raleighm 6y ago
  Imagine this is something you know to be true about yourself, or is an attitude necessary/useful to fuel innovation: “What matters most to me is doing something daring that plausibly benefits others”. I suspect many people have deep drives of this nature, featuring multiple values - in this case, being daring (a matter of character) and benefitting others (a matter of welfare). It would be irrational in such case to pursue a project: (1) that isn’t daring, (2) without regard to whether it’s daring, (3) with exclusive regard to whether it’s daring, (4) that doesn’t plausibly benefit others, (5) without regard to whether it plausibly benefits others, or (6) with exclusive regard to whether it plausibly benefits others. 3 and 5, and 2 and 6, are corollaries. Is irrationality necessary or helpful to fuel innovation? Of course depends on what we mean by "rationality" and what value(s) rationality is meant to serve. My answer would be "no".
  • cma 6y ago
    Only seems true if rationality itself can’t feed back into "What matters most to [you]."
    • raleighm 6y ago
      How so? Clearly I view rationality as an adverbial matter. 1 through 6 remain true even if you add the word "rationally" to the what-matters-most statement. The list would get longer than six.
• loopz 6y ago
  Rational deals with knowns. Innovation deal with unknowns. The unknown may be known, thus become rational! Embrace the incompetence to expell it.
• BLKNSLVR 6y ago
  I believe that all projects I've been involved in would not have been green-lighted had the full extent of time, effort, and costs been known up front. And I think that's part of the game. How much leg do you need to reveal to get the signature? They've all been worthwhile projects in the end, however.
  • marcosdumay 6y ago
    Looks like the green-lighting procedure is highly irrational.
    • BLKNSLVR 6y ago
      Just been thinking about the why of this. I think comes down to the details. It's those little details, the real weeds, where the complexity lies that makes system implementations difficult. And, generally, management doesn't want to know, and often don't have the technical knowledge to understand those very details, no matter how well or deeply they're explained. The other side of that coin is the fact that on the technical knowledge side, if they know the details they have to consider, there's a kind of hubris that blinds them to the actual effort required to cater to those details. Not maliciously, but just by the fact it's considered a known rather than unknown it just may not get the pre-project attention necessary to determine time and effort required, and so it gets under-estimated. I think what I'm trying to say is that the tension between good, fast, and cheap is the fundamental reason, in my experience. Management tends to want all three, and so that's what's catered to to get the thing kicked off. Yes, it's irrational. Almost by necessity.
• deleted 6y ago
  [deleted]
• known 6y ago
  "You are under no obligation to remain the same person you were a year ago, a month ago, or even a day ago. You are here to create yourself, continuously" --Feynman
• zuhayeer 6y ago
  "I also like the strategy of temporarily suspending your disbelief and throwing yourself headlong into something for a while, allowing your emotional state to be as if you were 100% confident" All work happens because of this essentially. A result of over-zealousness. Irrational thoughts that keep you going that extra mile at 2 am because you really believe in an idea (more than it ought to be believed many times). If people didn't feel irrationally strong about things, then nothing meaningful (sometimes low probability of success, but high expected value as the author mentions) would get done.
• hvasilev 6y ago
  Rationality is overvalued for day to day life. It works for certain things like science, where you are lead by the evidence and you constantly adjust some model of understanding of reality to more accurate standards, but it really don't seem to work well for everything in one's life. The reason is that we operate under deeply unscientific environments like partial-information, uncertainty and unpredictability. In these environments 'intuition' that might not be backed by rational thought is frequently more valuable. Technically you can try to be always rational in your life and play the 'risk minimization' game, but you will probably have a very mediocre life with limited success.
  • jstanley 6y ago
    If you're trying to make rational choices, then risk minimisation is probably not what you want to do. You probably want to aim for utility maximisation within acceptable risk bounds.
  • TeMPOraL 6y ago
    I think rationality is both overvalued and undervalued for day-to-day life. Being able to write out the Bayes formula or recite the list of logical fallacies on the spot isn't useful for much at all, and nobody has time to do proper Bayesian updates on anything. But I do think that internalizing rational thinking is useful for honing your intuition. Our modern world is more complicated than what our brains were used to. It's no longer just social issues and immediate survival in small communities. We aren't used to dealing with things too small to see with your eye, and distances too large to walk. We aren't used to a world when most rewards cannot be attributed to a particular person's work. We aren't used to a world, where the main threat to your well-being isn't bandits or wild animals, but the constant barrage of salesmen and advertisers, utilizing hundreds of years of research to trick you into doing something stupid. We aren't used to a world, where almost all relationships are transient. For the last point, consider this comment. I'm an Internet stranger. You've probably read my other comments in the past, you'll probably read some more in the future. But quite likely, you won't connect all of them together and attribute to a single person in your head; you'll see each as a piece written by a different Internet stranger, next to all other comments here. Every comment is thus a momentary interaction without prior context, and which doesn't give you any context for future interactions. The same is true for most news you read, and most social media comments you see. This is not exactly useful for our intuitions, which are optimized for processing actual relationships with people. So I think it may be helpful to study rational thought in order to calibrate your intuitions for these new times.
• rayrrr 6y ago
  Yes.
• _curious_ 6y ago
  Interesting article, really made me think, thank you.
• nine_k 6y ago
  Indeed, irrationality fuels innovation! Look at the phenomenon called life. Life evolves by doing random mutations, and throwing away everything that fails hard enough. No analysis is performed at all, and reams of completely pointless changes are tried. This process has produced the most innovative and advanced chemical, mechanical, and information-processing devices known to date. The problem of course is that the random-walk approach immensely wasteful. In our daily lives, we strive to somehow less waste, and tend to avoid being an unfortunate random mutation destined to fail. Here genetic evolution gives way to memetic evolution. But the memetic evolution has many of the same properties: many "random" things are tried, and a number of most spectacular successes are results of lucky coincidences and following patently wrong initial ideas. Of course, most of such crazy ideas just fail, like in biological evolution. I would compare innovation to stock market: while you can sort of predict some local movements with a chance better than rolling a dice, you still face a fundamentally random process, and it's rational to approach it like one. For one thing, it means to accept its unpredictability and the limited usefulness of any rational models. Following a hunch may be as good a strategy as careful analysis. Probably a mix of both would give the best results; it looks like what some famous innovators did.