Book Reviews
Book Review:The Art of Clear Thinking

A complete shortlist of the various behavioural biases we suffer from

In 1932, Rolf Dobelli came across the diaries of his great-uncle. His uncle had immigrated from a tiny Swiss village to Paris to seek his fortune. In August 1940, two months after Paris was occupied by the German Nazi forces, he noted: “Everyone is certain that the Germans will leave by the end of the year. Their officers also confirmed this to me. England will fall as fast as France did, and then we will finally have our Parisian lives back—albeit as part of Germany.” Instead of two months, the Occupation lasted for four years. The long German Occupation of France is now seen not as an accident but part of a military strategy. This is how history comes across to us always: What has actually happened appears to be the most likely of all scenarios, the most obvious outcome and we go on to justify it with reason. Human minds find it hard to think of alternative paths of history—what else could have happened. We are easy prey to what is called a ‘hindsight bias’.

Over the past two decades, behavioural science has opened our eyes to how we actually think and behave. Most often, we act irrationally. Hindsight bias is just one such example. We suffer from endowment effect (cling to things), can’t forget the time and cost spent on a losing enterprise (sunk cost fallacy) and judge decisions by their outcome (and not the process) and come to conclusions by first impressions (primacy and recency effect).

Books describing irrational behaviour and how to deal with it are now common, carrying titles such as Predictably Irrational, Thinking, Fast and Slow, Wilful Blindness, Your Money and Your Brain, The Winner’s Curse, Gut Feelings, Nudge, The Signal and The Noise, etc. Many describe the same famous experiments and, ultimately, hold a mirror to us about the inner workings of our mind, which invariably surprises us.

This book topped the German bestseller list and it is now an international bestseller as well. The book is divided into 99 chapters of only three-four pages each, focusing on one kind of behavioural trait or error that characterises us. The subject matter lends itself to real-life stories and experiments, making the book interesting to read. But Dobelli has chosen these with care. You will find scores of appealing anecdotes.

Here is one. In 1913, Maximilian Ringelmann, a French engineer, studied the performance of horses. He concluded that the power of two animals pulling a coach did not equal twice the power of a single horse. Surprised by this result, he extended his research to humans. He had several men pull a rope and measured the force applied by each individual. On average, if two people were pulling together, each invested just 93% of his individual strength, when three pulled together, it was 85% and, with eight people, it was just 49%.

This is called social-loafing effect. It occurs when individual performance is not directly visible; it blends into the group effort. It occurs among rowers, but not in relay races, because here, individual contribution is evident. Social loafing is rational behaviour: why invest all your energy when half will do—especially when this little shortcut goes unnoticed? Quite simply, social loafing is a form of cheating of which we are all guilty even if it takes place unconsciously just as it did with Ringelmann’s horses.

Here is one more that describes the importance of knowing what you really know and have no opinion about the rest. After receiving the Nobel Prize for physics in 1918, Max Planck went on a tour across Germany. Everywhere he delivered the same lecture on new quantum mechanics.

Over time, his chauffeur grew to know it by heart. He said: ‘It has to be boring giving the same speech each time, Professor Planck. How about I do it for you in Munich? You can sit in the front row and wear my chauffeur’s cap.’ Planck liked the idea, so that evening, the driver held a long lecture on quantum mechanics before a distinguished audience.

Later, a physics professor stood up with a question. The driver recoiled:  ‘Never would I have thought that someone from such an advanced city as Munich would ask such a simple question! My chauffeur will answer it’ he said, passing the mike to Planck.

This apocryphal story has a genuine message: According to Charlie Munger, Warren Buffett’s partner in Berkshire Hathaway, there are two types of knowledge.

First, real knowledge that we see in people who have committed a large amount of time and effort to understanding a subject. The second type is chauffeur knowledge—knowledge from people who have learned to put on a show. “Unfortunately, it is increasingly difficult to separate true knowledge from chauffeur knowledge,” writes Dobelli. “With news anchors, however, it is still easy. These are actors. Period. Everyone knows it. And yet it continues to astound me how much respect these perfectly-coiffed script readers enjoy, not to mention how much they earn moderating panels about topics they barely fathom. With journalists, it is more difficult. Some have acquired true knowledge. Often, they are veteran reporters who have specialised for years in a clearly defined area… The majority of journalists, however, fall into the category of chauffeur… Their texts are one-sided, short, and—often as compensation for their patchy knowledge—snarky and self-satisfied in tone.”

Rolf Dobelli, a PhD in philosophy, the co-founder of, has not written anything new. Original work on this subject has been done by Daniel Kahnemann (Nobel Prize winner), Amos Taversky, Gerd Gigerenzer and Richard Thaler. Dobelli has put it all together making it highly accessible with bite-sized chapters. And, yet, this book has become a bestseller. In that sense, its success is based on the same human irrationality it describes! Having said that, if there is just one book you should buy on this topic, this is the one, available at a special Indian price.




4 years ago

Thank you Mr. Basu. Simply too good!

Book Review: Fly Fishing the Stock Market

A glossy book tries to draw a parallel between angling and trading

What do trading and fly fishing have in common? Both require passion, patience and persistence; at least according to fisherman-turned-trader Stephen Morris who has penned Fly Fishing the Stock Market (Wiley; $75; 280 pages). He calls these traits the three Ps. However, there’s an important point to note: this book is purely about technical analysis and not about ‘bait fishing’ (i.e., long-term investing; fishermen who just cast their fishing net and simply wait). It is purely for short-term traders or ‘fly fishers’. Drawing upon his experiences as a fisherman, Morris explains how to approach trading the way he approaches fly-fishing. He explains that, in order to catch a good fish (or a good trade) one needs to know his ecosystem (or markets) and be extremely observant, even for tiny signals in the lake, so to speak.

The chapters are very interestingly titled, with fishing terminology, and sequenced in linear fashion, right from the assembling of the ‘fishing toolbox’ (i.e., tools that the trader should possess) to the final catch (close a trade). The book has several analogies with fishing that are cited to illustrate a point. For instance, in one chapter titled “Fishing Seasons/Market Seasons”, he talks about how fishing strategy varies in different times of the year and the same applies to stock markets as well. He also talks about the importance of keeping a trading journal, just as a fisherman keeps a fishing journal. This helps traders improvise upon successes and mistakes alike.

Printed on art paper, in colour and full of illustrations (both of which explain the book’s high sticker price and weight), it is definitely not for beginners. Once you open it, you will be blown away by the fancily illustrated charts that could scare off even the most seasoned trader. Even though the publisher claims the book to be ‘accessible’, it isn’t. I feel it is more targeted at traders who’ve had a fair amount of knowledge of the markets and who seek more insights into the trading process, based mainly on technical analysis.


Tees for a Cause

An ‘online store with a heart’ is how Kultwear describes itself. Anishi Khetan writes about how this unique initiative allows you to help a cause and an artiste, every time you opt for one of its funky Tees

As a nation, we are a cynical and pessimistic lot. We have an opinion on everything but act on nothing. Follow Twitter and you will find many who will teach others how to run a government but, when a person is in distress and asks for help, no one comes forward,” says Kalyan Srinivas, founder of PebbleBay Clothing, a retail apparel-maker from Tirupur. He has hit upon a unique initiative to get fence-sitters to help social causes: Kultwear, a unique online initiative.

If you buy a hip T-shirt with a message from Kultwear, Rs100 from the price goes to a new charity every week. And this is not an empty promise. The cause and the charity with their links are listed on the website, with the amount raised that week as well as the total amount raised by Kultwear. For instance, at the time of writing, Rs1,100 had been raised in just over a day for Bal Utsav, an education initiative of the Child Empowerment Foundation of India. Sometimes, the cause chosen is that of an individual not an organisation’s. For instance, one week, Kultwear raised funds for Chanchal, a 19-year old acid-attack victim from Bihar through an NGO called Video Volunteers. Chanchal, mutilated beyond recognition, needs help for her expensive medical treatment. Another week, Kultwear raised funds for the medical treatment of PM Sahay, a retired banker, who struggles to sell puppets on the streets of Delhi to earn a living.

The important thing about Kultwear is its philosophy—being positive, cheerful and ‘discouraging pity purchase’. This means that you don’t buy an exorbitantly priced T-shirt because of its pious objective. In fact, Kultwear is really serious about the quality of its products and stitching specifications are posted on the website. Yet, as Kalyan points out, “our pricing is lower than market prices for the same quality of T-shirts.”

Another dimension to Kultwear is the effort to encourage artistes from around the world to promote their work in T-shirt design. Kultwear invites submissions from artistes on a fee-plus-royalty-basis. More importantly, it tags the name of each artiste on every T-shirt that is shipped and posts the details on For you, as a buyer of T-shirts, Kultwear offers three new designs every week, which are available only for that week, that is, 150 designs to choose from every year.  

Kalyan Srinivas, the founder, comes from a telecom background but entered apparel manufacturing out of passion. He runs PebbleBay Clothing as his ‘bread ‘n butter’ business, while Kultwear fulfils his “urge of doing something for the society”, or to shake up the “collective conscience of millions of Indians to bring a positive change that individual thoughts cannot.” was started in March 2013 and Kalyan wants to grow it into a brand that will work for social good and provide cheerful, value-for-money clothing and ensure that “no one walks away empty handed.”

T-shirts being the first choice of clothing for millions of youngsters in India, Kultwear is an idea that has the best chance of tugging at the social conscience of our youth. Meanwhile, it has already helped a range of charities including Akshay Patra, Aham Bhumika, New Ark Mission, Red Paws Rescue, classical musicians and Braille books for children. It plans to run impact features on how the funds raised each week have been utilised and how, just by buying one T-shirt, one can bring about a significant change.

After reading about Kultwear’s meticulous effort to get people more involved in social causes, the question is: Will we fulfil its small expectations? It is up to us to make it happen and connect Kultwear with NGOs and people who buy T-shirts.

PebbleBay Clothing,
#14, MGR Nagar, 6th Street,
PN Road, Tirupur  641603
Tel: +91 8097 636327
[email protected]


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