[reread]
A book written for fun.
Borrowed wisdom: when you talk or write about things not naturally springing from your memory.
Our brain sees the world less random than it is.
There is the world where we live, and the world we are convinced we live in: two different planets.
The author becomes transformed by his own book.
ex ante (expectations) --- present --- ex post (narrative) [hindsight bias]
more random than we think ≠ all is random
Mistaking irreverence for arrogance => confuse skepticism for nihilism.
round-trip fallacy: using statistics without logic is a mistake, but using logic without statistics is not. The fallacy is that people using logic are asked for data to support the claims, but this data is not actually needed. However, you cannot use statistic without logic (as is frequently the case).
Solon's warning: you cannot claim victory or success until the end, because fortune can change.
Alternative histories thinking: you can't judge a performance by its results, but by the costs of the alternatives. Consider the same outcome, one which is only achieved by a single history and another that is consistent through different historie. They are qualitatively different.
There is no need to compute alternative histories, only to assess their attributes. Probability is a qualitative subject, a way of thinking.
Russian roulette: Reality as a revolver that has thousands of bullet chambers, instead of six. Observe the barrel of reality, of which we generally know nothing.
Denigration of history: feeling that things happening (or happened) to others would not necessary happen to me.
Losing sight of the risks by never considering the losers.
Ingratitude factor: if your advises work and fatal things never happen, people will just complain about you spending. And of course, if fatal things happen, you are blamed for that. Bad either way!
Politics and doctors dilemma: warn against risk but not condeming it. Tension between false positive and false negative. With the former, you tell a patient he has cancer but he has not. With the latter, you tell him he is healthy but he is not. Their business need error margins.
People do not like to insure against something abstract. Only vivid risks get the attention.
Our brain is superficial when it comes to risk and probability. Clues are largely determined by emotions or by the ease with which they come to mind.
Risk detection and avoidance are not mediated in the thinking part of the brain, but in the emotional one.
Rational thinking has little to do with risk avoidance. Rational thinking is more about rationalising one's actions by fitting some logic to them.
Your emotional apparatus is the cheapest to deliver sensation, and it can fool you the most.
Confusion between correctness and intelligibility: (danger of thinking that the latter implies the former)
- correctness: the quality of being in agreement with the true facts or with what is generally accepted, corrección, exactitud. He quickly proved the [] of his findings.
- intelligibility: (of speech and writing) the quality of being possible to understand: Foreign accented speech may affect []. She reviews articles for consistency and [].
Einstein: common sense is nothing but a collection of misconceptions acquired by age eighteen.
What sounds intelligent is suspicious.
The generator of reality is not observable.
Epiphenomena: the illusion of cause and effect only because they coexist in time.
Risk manager: more concerned about the impression of risk reduction than actual risk reduction.
Watching your risks do not decrease them. It only gives you illusion of control. Dangerous.
Mathematics is a tool to meditate rather than to compute.
All respect we have for history does not translate well into our treatment of the present.
Things are always obvious after the fact.
The past always looks deterministic.
Our minds will interpret most events not with the preceding ones in mind, but the following ones.
A mistake is not something to be determined after the fact, but in the light of the information until that point.
Predicting the past.
Distilled thinking: thinking based on information around us that is stripped of meaningless but diverting clutter.
Solon's warning as "age is beauty". Contrast this with the prevailing culture.
Value distilled thought over newer thinking.
Progress: Some new information is better than past information. But when in doubt, reject the new.
The opportunity cost of missing a new thing is minuscule compared to the toxicity of all the garbage one has to go through to get to an (alleged) jewel.
Efficient market: prices should adapt to all available information in such a way as to be totally unpredictable to us humans and prevent people from deriving profits.
Survival of the fittest: under regime switching, unclear who will be the fittest. And fittest is different from appearing to be the fittest.
The wise man listens to meaning; the fool only gets the noise.
For the gods perceive things in the future, ordinary people things in the present, but the wise perceive things about to happen. (Cavafy)
In their intense meditation the hidden sound of things approaching reaches them and they listen reverently while in the street outside the people hear nothing at all. (Cavafy)
Scaling property of randomness: if you observe with dt, you only see noise. If you observe big Dt, you can see signal.
Watching with small dt is bad for your health. You will eat all the noise. And, even if on average you don't lose or win, the pleasure of winning is small compared to the pain of losing. So emotionally you lose even if mathematically you have net 0.
Is this a reason against Carpe diem or Mindfulness?
We don't need to be rational and scientific when it comes to the detail of our daily life - only in those that can harm us and threaten our survival.
If I am going to be fooled by randomness, it better be of the beautiful and harmless kind. Art, music, literature...
No precise plan ahead of time as to what to do in the event of losses.
Denial when losses occur.
How frequent is the profit is irrelevant; it is the magnitude of the outcome that counts. However, commentators have their success linked to how often they are right or wrong.
This could apply to science: what is important is the value you provide, not the amount of papers you publish (me).
Pushing randomness under the rug: Investors will be drawn into strategies that experience rare but large variations, for emotional reasons.
People tend to be sensitive to the presence or absence of a stimulus rather than its magnitude.
Life is not a simple win/lose situation, as the cost of the losses can be very different from that of the wins.
Don't approach anything as a game to win.
Stay away from people of competitive nature, who try to reduce the world to categories: number of published papers, etc.
You can accumulate wins and yet sitting on a time bomb.
Taleb is a crisis hunter.
The more information you have, the more you are confident about the outcome.
Classical statistics: the confidence level increases as sqrt(n) as n (sample size) increases. Urn with black and red balls. I want to know the relative proportion of each colour. After 20 drawings, my confidence level is sqrt(2) times greater than after 10 drawings.
Real statistics: distributions are not symmetric. If there are way more black balls than red, our knowledge about the absence of red will increase very slowly, slower than sqrt(n). But our knowledge of the presence of black will increase faster than sqrt(n).
The asymmetry in knowledge is not trivial.
The problem of stationarity: in some cases, the proportion of red balls is not constant, but changes randomly. Then, our inferences become insignificant.
Distributions not being stationary!
No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion (Hume, John Stuart Mill).
Ratchet 1: We can use data to disprove a proposition, never to prove one. Data to reject rather to confirm hypotheses.
Ratchet 2: If the past, by bringing surprises, did not resemble the past previous to it, why should our future resemble our current past?
Read discoveries don't last. Self discoveries last.
Feeling you need to read everything can prevent you from taking contemplative stops.
I needed the backing of my bank account so I could buy time to think and enjoy life.
Popper: the epitome of no nonsense.
Two types of theories:
1) Theories that are known to be wrong, as they were tested and adequately rejected (they are falsified).
2) Theories that have not yet been known to be wrong, not falsified yet, but are exposed to be proved wrong.
A theory is never right.
A theory cannot be verified.
A theory that falls outside of these two categories is not a theory.
Popper refused to blindly accept that knowledge can always increase with incremental information, which is the foundation of statistical inference. It may in some instances, but we do not know which ones.
The matter of knowledge and discovery is not so much in dealing with what we know as in dealing with what we do not know.
These are men with bold ideas, but highly critical of their own ideas; they try to find whether their ideas are right by trying first to find whether they are not perhaps wrong. They work with bold conjectures and severe attempts at refuting their own conjectures (Popper).
These are scientists.
Popper is the antidote of positivism. Verification is not possible.
Positivism: the belief that knowledge comes from things that can be experienced with the senses or proved by logic (Cambridge)
We like to emit logical and rational ideas, but we don not necessarily enjoy their execution. We are not genetically fit to be rational and act rationally.
Memory is a machine to make inductive inferences.
Causality is easier to commit to memory.
Induction, going from plenty of particulars to the general, takes less room in memory. But the effect of such *compression* isthe reduction in the degree of detected randomness.
With enough time, any random process can produce a high quality output. The interest question is whether the same process can produce with the same quality just after the previous one.
The initial sample size matters greatly. If you have 5 monkeys and 1 writes the Iliad vs having 5000000 monkeys instead. The conclusions will greatly differ.
Becoming more rational, or not feeling emotions of social slights, is not part of the human race. There is no solace to be found from reasoning.
Survivorship bias => the highest performing realisation will be the most visible. The losers don't show up.
Beware of your sample. Include those who perished. Consider the cemetery.
Even a broken clock is right twice a day.
The number of persons with great outputs depends far more on the number of initial people than on their ability.
People believe that they can figure out the properties of the distribution from the sample they are witnessing.
Ergodicity: the believe that time will eliminate the annoying effect of randomness.
Nobody accepts randomness in his own success, only his failure.
Polya process: Assume an urn with equal number of red and black balls. When you take a black, you put the ball back in the urn and add a given number of black balls. If you drew a red ball, you would return the ball plus some number of extra red balls.
Mathematics may be of only secondary help in our real world.
Monte Carlo simulations: In freeing us from equations it frees us from the traps of inferior mathematics.
Mathematics is merely a way of thinking and meditating, little more, in our world of randomness.
Gaussian distribution: charted randomness. But randomness is usually uncharted.
Mandelbrot: there is a wild type of randomness of which we will never know much (owing to their unstable properties).
Our brain is not cut for nonlinearities.
Better to be loved by a dozen than liked by the hundreds.
Mathematical expectation = linear combination of outcomes. But our minds can only visualise the pure states. Eigenvalues? Connection to QM?
We are rational, but in a limited way: boundedly rational.
Prospect theory: Looking at differences, not absolutes, and resetting to a specific reference point.
Sound-bite effect, or affect heuristic: People react to concrete and visible risks, not abstract ones. What emotions are elicited by events determine their probability in your mind.
Belief in the law of small numbers: Inductive fallacies; jumping to general conclusions too quickly.
Two systems of reasoning: the working brain is not quite the reasoning one.
Overconfidence: risk taking out of an underestimation of the odds. People overvalue their knowledge and underestimate the probability of their being wrong.
Anchoring: giving value in reference to a recent reference instead of considering the whole history.
The availability heuristic: death from terrorism seems more likely than death from any cause, including terrorism!
The Linda problem, or the representativeness heuristic: a feminist student is more likely to be a feminist bank teller than just a bank teller.
The simulation heuristic: counterfactual thinking. Mentally undoing events.
Two systems of reasoning:
1) effortless, automatic, associative, rapid, parallel, opaque, emotional, concrete, specific, social, personalised.
2) effortful, controlled, deductive, slow, serial, self-aware, neutral, abstract, sets, asocial, depersonalised.
Our brains are made for fitness, not for truth (Steven Pinker).
We do not think when making choices but use heuristics.
We make serious probabilistic mistakes in today's world.
I consider myself as prone to foolishness as anyone I know, in spite of my profession and the time spent building my expertise on the subject. But here is the exception: I know that I am very, very weak on that score. My humanity will try to foil me; I have to stay on my guard.
I am not intelligent enough, nor strong enough, to even try to fight my emotions.
Wittgenstein's ruler: Unless you have confidence in the ruler's reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler. The less you trust the ruler's reliability (the prior), the more information you are getting about the ruler and the less about the table. The book review from an non-qualified person is all about that person. The opinion from a qualified person is all about the book.
The toxicity of the information age...
I have personally failed in achieving a general insulation from randomness, but I have managed a few tricks.
We are mere animals in need of lower forms of tricks, not lectures.
It is harder to act as if one were ignorant than as if one were smart.
It is emotionally harder to reject a hypothesis than to accept it.
Path dependence of beliefs
Tendency to get married to positions.
Purely rational behaviour can come from a defect in the amygdala that blocks the emotions of attachment, meaning that the subject is, literally, a psychopath.
Absence of marriage to ideas is rare among humans.
People who switch parties are traitors, apostates.
Computing instead of thinking: an error.
Probability entered mathematics with gambling theory, and stayed as a mere computational device.
People "measure" risks, particularly if they are paid for it.
Start a meeting by convincing everyone that we are a bunch of idiots who know nothing and are mistake-prone, but happen to be endowed with the rare privilege of knowing it.
Attribution bias: You attribute your success to skills, but your failures to randomness. It is an heuristic that makes us actually believe so in order not to kill our self-esteem and keep us going against adversity.
People confuse science and scientists.
Science is great, but individual scientists are dangerous.
A scientist may be forced to act like a cheap defence lawyer rather than a pure seeker of the truth. A doctoral thesis is defended.
Science is better than scientists.
Epic heroes were judged by their actions, not by the results.
We are left only with dignity as a solution.
Dignity defined as the execution of a protocol of behaviour that does not depend on the immediate circumstance.
Just listen while shaking by emotion but not with the coward's imploration and complaints.
While shaking with emotion. No stiff upper lip. There is nothing wrong and undignified with emotions. We are cut to have them. What is wrong is not following the heroic or, at least, the dignified path. That is what stoicism truly means.
Randomness and personal elegance.
Ideas do not truly sink in when emotions come into play; we do not use our rational brain outside classrooms.
Try not to blame others for your fate, even if they deserve blame. Never exhibit any self-pity. Do not complain. The only article Lady Fortuna has no control over is your behaviour. Good luck.
Lower-ranking persons are judged on both process and results. Top-ranking only on results.
Our attribution of heroism to those who took crazy decisions but were lucky enough to win shows the aberration. We continue to worship those who won and despise those who lost, no matter the reason. I wonder how many historians use luck in their interpretation of success, and how many are conscious of the difference between process and result.
Schedule randomness help to relax.
We are made to live like firemen.
You can decide whether to be (relatively) poor, but free of your time, or rich but as dependent as a slave.
We are not designed for schedules.
Books are fun to write, papers are painful.
Would you like to know with great precision the date of your death?
Behave with randomness. Unpredictability is a strong deterrent.
We favour the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract.
Obra escalofriante.