A few weeks ago I ranted about a question I was asked on a Project Athena assessment. To quickly summarize, they asked a Monty Hall-style question and I was enraged.
The Monty Hall Problem, and others like it, are typically used as a cudgel to argue that humans are irrational and hopelessly lost in a world of complexity. Nothing could be further from the truth.
As Gerd Gigerenzer points out in his book Risk Savvy, on the show “Let’s Make a Deal” with Monty Hall, the "“Monty Hall Problem” never really came up. It was Monty quickly moving through the audience playing all kinds of mind games, giving away prizes, offering money or things behind a curtain, or asking people to price things within a certain range, and generally just messing with people.
In this particular clip, the last few people have all chosen what’s behind the curtain and been surprised with a new car and new living furniture. He’s now going to offer a deal to a third contestant:
At 9:13 you can see the skeptical look on the contestant’s face. She clearly feels strongly that Monty is trying to entice her to choose what’s behind the panel and she shrewdly chooses to stay with her package. Then you see Monty go around and mess with a few other people by offering choices. If you go around 13:00 minutes you can see how he tricks another person into choosing a box rather than $400 dollars. If you keep watching, you will see that the contestant who doesn’t choose what’s behind the paneling is rewarded for her intuition with a new wardrobe, a trip to France, and 3k cash. She is rewarded for her intuition.
The point here is that the show in real life was about real trade-offs and trying to not get tricked by Monty.
We can see that the pure “Monty Hall Problem” is a pure abstraction that bares very little resemblance to the real problems posed by Monty Hall on the show “Let’s Make a Deal.” Whereas the pure problem is supposedly about putting emotions aside and doing mathematical analysis in the face of pressure, the real problem on the show wasn’t about analysis, but about using intuition to try to keep Monty from tricking you. And this speaks volumes about the difference between dealing in abstractions and dealing with real life.
As we learned about in the first essay on this topic, the enemy is under no obligation to fire on additional routes and is under no obligation to be restrained from firing on all of them. The key point for decision-making is that real life, is usually, uncertain. Calculated analysis will only get you so far.
Discerning readers will see the connection with the essay Sucker, which is about Nassim Taleb’s character Fat Tony. Fat Tony is not a sucker. He deals in the real world and doesn’t care about your little tests that supposedly show that humans are irrational. And because Fat Tony isn’t a sucker, he can tell when Monty Hall is full of crap. This is why it’s important to have Fat Tony around. And I am not making some abstract argument here. This is highly pragmatic.
Think about all the people who lost their shirt because of the downfall of FTX. In case you’ve been living under a rock, FTX was a crypto exchange founded by someone named Sam Bankman-Freid or “SBF.” SBF convinced some of the most sophisticated investors in the world to either invest in or hold assets with FTX and the whole thing was, basically, a Ponzi scheme.
I will bet you that if we made a list of the ten largest investors in FTX, nine of them would know the “correct” answer to the Monty Hall problem. But Fat Tony doesn’t give a rat’s behind about your little academic question, and Fat Tony wouldn’t have lost a dime investing in FTX becuase he would have seen that it was a Ponzi scheme. Fat Tony doesn’t care about abstract questions unless they directly translate to the real word. Some of us, myself as chief, love dealing in abstractions and ideas. We need Fat Tonys to keep us grounded and keep us from getting swindled too bad.
In closing, the Monty Hall problem doesn’t give you any new information about the real world. It is fun little brain teaser that can catch people on a technicality. it shouldn’t be the basis for any assessment given to anyone, about anything, except maybe a math question about probability.
Have a great week!