Some entrepreneurs like to take the path of least resistance

Published in the San Diego Union-Tribune, July 24, 2017

Certainty is “perfect knowledge that has total security from error, or the mental state of being without doubt.” Fat chance. No such thing.

So the question is what role does uncertainty play in our decision-making process? And (at no time will my hand leave my arm) what’s that got to do with my favorite addiction — magic?

Let’s start with David Hardisty, professor at the University of British Columbia, who co-authored a study that finds “people overwhelmingly opt for certainty, regardless of whether that certainty is in the present or in the future.” The fascinating issue here is one of time. Prospect Theory (Daniel Kahneman) holds that when it comes to gains, we are very inclined to choose the more certain route (bird in the hand theory), but when it comes to losses, we are very inclined to “roll the dice,” to delay, to defer, to hope, to choose risk — in other words, to avoid dealing with an unpleasant reality.

But the Hardisty study flipped this. It showed that people were equally inclined to chose certainty — whether it was gains or losses, and regardless of whether it was current or in the future. His co-author, Jeffrey Pfeffer, a professor at Stanford Business School, argued that “people really don’t like the cognitive load of making decisions under uncertain circumstances.” In other words, mentally balancing different probabilities and processing multiple decisions in varying time frames is just too damn complex, and so most of us opt out and just resign ourselves to the path of least resistance, including sometimes making no decision.

My son recently told me a story that supports this. He was asked to help a company get out of a debt mess. They had taken on too many loans at too high interest rates and they were down to their last couple of weeks of cash and darkness was at the door. (Whether or not they should have taken those loans is a topic for another time). My son knows the fintech/credit business quite well and he set them up with a firm that does just that — debt settlement for businesses. They have a conference call, and the specialist explains to them that given the size of their problem, there are only two options at this time — sign up and do a work out or declare bankruptcy. (You can see where this is heading — certainty and uncertainty in real time or in the future.)

To even be considered as a potential client, the company needed to send some financial material to the guru. They were very reluctant on the phone, because their image of themselves was not someone who would “settle a debt for less than 100 cents on the dollar.” So we have an interesting stew of “only two ways out in conflict with a personal image” (whether real or imagined). As of this writing, the company has not even sent the material to see if they could be accepted into the program. Denial. And the misplaced hope that a fairy godmother will arrive in the nick of time.

So now let’s see where magic fits in. I live hard over in the real world; I consult on messy situations and often have to give painful assessments of the current state of affairs that are not what the client hoped for. (I have a shelf full of black hats.) It is the painful state of reduced options, informed by the balance of risk and uncertainty.

And what is more deliciously uncertain than magic? Recently, a magician friend of mine, Tamer Qafiti, went to Donovan Prison to dazzle the inmates with a bit of close-up prestidigitation. Tamer says his magic is “built on the foundation of deceiving the mind.” When we see a trick, we are instantly confronted with its impossibility — how did the page from the book marked with my initials get into that manila envelope at the back of the room?

Tamer found that the inmates are no different than you and me. They were astounded, they clapped and asked for his autograph. Remember that the boys in prison have a very well-defined sense of certainty, yet they were mesmerized by the conflict and mismatch between what they think they saw and what actually was. And so it seems to me that magic is a metaphor for the hope that there are more than two options.

Rule No. 522:  That’s why they call it magic.

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