[MUSIC] Through last lecture, we learned how brain scientists view the world. The brain has copied the world, which is formed by our past experiences. Even when viewing the same thing, depending on one's experiences, way of thinking, and the stance, the perspective at which the object, event, person etc. are viewed is different. Today, we are going to talk about this. Before I start, I want to begin by introducing a Japanese film called, Rashomon, directed by Akira Kurosawa. The movie was released in 1950 and the genre is mystery-crime. During the Heian period, when the Rashomon Heian city, (currently Kyoto city), was in ruins, three men that were awaiting the heavy rain to stop had a conversation. One of men, who was a woodcutter, told his story about how he went into the mountains to chop wood, found the body of a murdered Samurai and had to report it to the authorities. Another man was a monk, who claimed to have seen the samurai and his wife traveling the same day the murder happened. The last man was able to hear about the story through the two witnesses. The film flashbacks to the morning of the current day. The witnesses made their statement in turn to the authorities. A Bandit(pirate) Who was a suspect, and the wife of the samurai also made their statement. However, the statements were all different. Eventually, a shaman was called to summon the spirit of the dead samurai and get his statement, too. But there were still no matching statements. The case fell more and more of a mystery. Through this film, I want to tell you about the Rashomon Effect. Memories are subjective theory, and therefore, despite witnessing the same incident different people will have different statement to say. However, all the statement were persuasive. The four different statements regarding one incident, were not lies. But the fact is, human can only view things from their own individual perspective. What we view differently depending on our situation are illusions. How does the left figure looks like? Even though we interpret the image as a triangle, in actual fact, it is a collection of simple pieces of geometrical shapes. This is called the Kanizsa triangle. Our brain has the capability to generate whole forms, particularly with respect to the visual, recognition of global figures. Instead of just a collection of simpler and unrelated elements. In the right figures, these blobs of ink are perceived as a panda bear, based on our past experience. We perceive external things in a similar process too. The past experiences naturally influence our present perception. Let us carry out a quick experiment. Please look at the screen and say silently the name of the animal. Next, repeat with the next image. Please silently say the name of the animal you see on screen. What was the name of the previous animal you saw? Present perception is a by-product of the past experience. Our fixation is formed in the same process. Rabbit and duck is a typical example of the cognitive illusion suggested by physicst and physician (Hermann von Helmholtz 1821-1894). The rabbit and duck became famous by Wittgenstein, when he introduced the figure in his later book, Philosophical Investigation in 1953. There are many examples where we view things from different. perspectives depending on our personal past experiences. The most common would be anchoring bias, just as a large ship does not move much when anchored, the first information presented becomes the reference point that affect the judgment made. Humans have a common tendency, where we heavily rely on the first information when making decisions about our thoughts. For example, the initial price, called for a used car, become the reference point during further negotiations. Therefore, if the final asking price were lower than the initial offer, the price would seem more reasonable, even if the price were higher than the value of the car. It is also actively studied in the field of economics. The paper in the below, Glamour, Value and Anchoring on the Changing Price and Earning was published in October of this year 2015, where the following question was asked. For the last 50 years, as a long term style investment strategy, value stocks showed better outcome than growth stocks and the leading stocks. Despite this, what do you think is reason for growth stocks in being a popular strategy? As a result, the reason that many investors are looking for leading stocks is due to the awareness that the high price earning raise(PER) multiple will go longer than actual. This is because investors have a reference point from when they first invested in leading stocks, which was when it had high valueable. With regard to rainbow colors, some may learn that a rainbow has a seven colors, whereas others may learn that it has three, four or even six. Today, we learned how a matter can look different, depending on what situations we have lived in. When we look at the outer world, we think that we remember. However, we only remember certain portions or change our memories depending on the life we lived, position, point of view, and attitudes. Next time, we will look at the principles of formation human mind and how we can escape from it. See you next time.