The Drunkard’s Search: The tendency for people to search in the easiest places, rather than the ones that are the most likely to yield results. The name comes from the idea of a drunkard seeking his car keys under a street lamp because the light is better instead of where he most likely lost them.
The drunkard’s search manifests itself constantly.
I think there is an argument to be made that the drunkard’s search concept can be expanded into behavioral economics. For example, with the Great Recession of 2007-2009, one need look no further than the job market. Most people are looking for work in the same communities where the factories have closed, the businesses are shuttered, and the wealthy fled long ago. Why? Because it is convenient, their children are enrolled in the local school district, and they own a house in the community. Rather than looking for the best long-term solution to the problem and then moving across the country to areas where jobs are not scarce, they continue to hug the street lamp and insist there are “no jobs”. They refuse, either through ignorance, stupidity, or denial, to realize there are no jobs next to this particular street lamp but there are plenty elsewhere.
Likewise, studies have shown that many millionaires in the United States researched and sought out lucrative businesses before entering them, rather than just stumbling upon a profitable industry. This is unique because the human tendency is for individuals to look for industries they understand. For example, the AP story I wrote about several years ago where a group of steel mill workers bought a steel plant, couldn’t make it work, and then killed themselves. When they had escaped their former employer, instead of entering a more lucrative field, they went right back into a terrible industry where the odds were against them because it was “well illuminated” to them due to their experiences.
Life is better (and the economic rewards richer) when one grabs a flashlight and goes down the dark alley searching for treasure.
Note: Mental models are a technique espoused by Charlie Munger wherein one catalogs and studies models of behavior in psychology, economics, and other disciplines for the purpose of using them to your advantage or guarding against them in business or life. This approach has had an extraordinarily positive influence on my standard of living, the enjoyment I get out of life, and my effectiveness as an investor. From time to time, you will see me add new mental models to a category on the site for my own benefit. You are, of course, free to read them but they are primarily there for my own reference.