Sunday, June 03, 2007

Fooled by Randomness
Sunday, June 3rd, 2007
The Hidden Role of Chance in Life and in the Markets, by Nassim Nicholas Taleb.
Starting to read 2nd ed., it took me a long time to get past the introductory parts (preface, etc.), because I kept getting caught by little gems of statements. Examples (okay you don’t have to agree, the differences among us make life interesting):
“Aut tace aut loquere meliora silencio (only when the words outperform silence).” That is a brave man, I thought - many times I know perfectly well I should shut up, or stop writing, but an inability to just stop while I’m ahead, is difficult for me. I excuse it only by the weak rationale of desiring completeness, but it is a weak excuse.
“Past events will always look less random than they were (it is called the hindsight bias).” “backfit explanations concocted ex post by his deluded mind”Montaigne vs Descartes -vague and informal (but critical) judgement vs formal thinking seeking logical certitude
something about which I have no iota of clue: “Hume’s Problem of Induction (or Aristotle’s inference to the general)” Ultimately, what do we know ?
Errors in interpretation abound — not understanding the differences between, coincidence and causality.
“It is a mistake to use … statustics without logic, but … is not a mistake to use logic without statistics.” Reminds me of the book “how to lie with statistics” …
“the classical ‘expert problem’ with the buildup of rules of thumb that do not have empirical validity?” — let’s examine our assumptions always.
“This book is about luck disguised and perceived as nonluck (that is, skills) and, more generally, randomness disguised and perceived as non-randomness (that is, determinism).” It seems that humans are terrible at estimating probability.
“Delivering advice assumes that our cognitive apparatus rather than our emotional machinery exerts some meaningful control over our actions.” Now that is a level of randomness, or attribution of what really exerts meaningful control over our actions. If it is not our cognitive apparatus, …
—– all this before chapter 1 —–