[MUSIC] In the previous video, we have seen how people don't always behave like rational players. More importantly, we have seen that not being a rational player can actually win you the game. In this video, we are going to challenge the notion of rationality a little bit further and we're going to try and give you an intuition as to why we are not always rational. In order to do so we're going to take a quick detour into the world of visual illusions. Take a look at the following two images. What you see is two circles, both of which are surrounded by several other circles. The question is, which of the two inner circles is larger? Now, I deliberately put this illusion because I think a lot of people will have seen this before. So we probably have two answers here. Those people who've never seen this before will say the circle on the left is larger. If you have seen this before, you might say well I know that they're both of equal size. And of course, you are right. But what's happening here? Now there are three things that we can learn from these answers. The first is the brain has notoriously bad at perceiving absolute values. So judging the absolute size of something is incredibly difficult and the brain constantly uses other queues to extract information from the environment. The second thing that we learn is knowing this, you can constantly adjust for the mistakes that the brain might make. In this case, perceiving one circle as larger than the other. The third observation, though, is even though you know they're of equal size, it doesn't actually change your perception. If you're being honest you still see the circle on the left as larger than the circle on the right. Let's take a look at two more examples. What do you see on this slide? On the right, you see a green shape and a red shape. On the left, you see a couple of line segments, and three Pac-Man's arranged in a particular manner. I deliberately tried to just describe the information that is actually present on the slide. What do you actually perceive? On the right, you probably perceive a green circle that is covering a red square. Now I can move apart these two shapes, and what you will see is that the second structure wasn't actually a complete square, but there's a corner missing off that square. Now this is something that's extremely unlike to happen. In fact, this might be the only time this happens when you perceive this kind of information. I didn't do this just to trick you, but I was just trying to make a point here, which is your brain constantly tries to fill in information. So it takes the information available, in this case the green circle, and a fraction of what appears to be a square, and fills in the missing information to arrive at the most likely explanation. And in this case the most likely explanation is of course a green circle, that's covering a red square. In very rare circumstances your brain might be wrong, as in this case. But most of the time it will actually be correct, and that will be valuable information based on which you can make decisions. Now let's take a look at the image on the left. Again, you have three Pac-Man's and a few line segments. And what you probably perceive on the left is a white frameless triangle hovering above another triangle. Now let's see what happens when I remove the three Pac-Man's. Normally what should happen is that maybe for a couple more seconds you still perceive the hovering triangle, but then it suddenly disappears. It turns out that the hovering triangle too, was just your brain filling in information that wasn't actually there. The particular arrangement of the circles and the line segments caused your brain to think that there is a triangle on top of another triangle. To summarize this, your brain is constantly filling in information that isn't actually there in order to give you a complete image of the world around you. It is important to note that your brain receive information through your eyes, through your ears, that information is translated into electrical pulses. And based on these pulses your brain has to reconstruct an extremely complex world that surrounds you. And the only way for your brain to do that is to make a lot of assumptions about the world around you. Most of the time your brain is right in these assumptions, but once in a while these assumptions are wrong. And then they lead to errors in your perception and your judgements. We've seen the errors in perception in the examples I just showed you. And you'll see more errors in judgments and decision makings in the video. [MUSIC]