The Psychology of Risk and Reward
An excerpt from The Aspirational Investor: Taming the Markets to Achieve Your Life’s Goals that I think you’d enjoy. Most of us have a healthy understanding of risk in the short term. When …
Over-confidence Bias
Bias from Overconfidence: A Mental Model
“What a Man wishes, he will also believe” – Demosthenes Bias from overconfidence is a natural human state. All of us believe good things about ourselves and our skills. As Peter Bevelin writes …
A System for Remembering What You Read
One year I read 161 books cover-to-cover. And that doesn’t include the ones that I started to read and put down. In the process, I learned a lot about what works and what doesn’t work. …
This Time is Different: The Four Most Costly Words Ever Spoken
When we look at situations we’re always looking for what’s unique. We should, however, give more thought to similarities. “This time is different” could be the 4 most costly …
Nate Silver: Confidence Kills Predictions
Best known for accurate election predictions, statistician Nate Silver is also the author of The Signal and the Noise: Why So Many Predictions Fail—But Some Don’t. Heather Bell, Managing Editor of …
A Decision-Making Magic Trick
Two important nuggets from an interview with Chip Heath, co-author of Decisive (more here), on improving our ability to make better decisions: A decision-making magic trick The closest thing to a …
The Four Villains of Decision Making
You’re probably not as effective at making decisions as you could be. This article explores Chip and Dan Heaths’ new book, Decisive. It’s going to help us make better decisions both …
Why Bad Things Happen to Good Decisions
Good decisions don’t always have a good outcome, just as bad decisions don’t always have bad outcomes. Sometimes bad outcomes happen to good decisions. And sometimes good things happen to …
Daniel Kahneman — What I Know
Nobel prize-winning psychologist Daniel Kahneman talks with the Guardian about his pessimistic mother, the delusion of investment bankers and the need for irony. Human beings cannot comprehend very …
Economists Are Overconfident. So Are You.
The point of regression analysis is to make predictions based on past relationships. “My concern,” one of the authors of the paper said, “is that when reading economics journal …
The Decision-Making Flaw in Powerful People
The paper below finds a link between having a sense of power and ignoring the advice of others. The authors argue that power increases confidence, which can lead to an excessive belief in one’s …
Future Babble: Why expert predictions fail and why we believe them anyway
Future Babble has come out to mixed reviews. I think the book would interest anyone seeking wisdom. Here are some of my notes: First a little background: Predictions fail because the world is too …
A Simple Checklist to Improve Decisions
We owe thanks to the publishing industry. Their ability to take a concept and fill an entire category with a shotgun approach is the reason that more people are talking about biases. Unfortunately, …
James March: The Ambiguities of Experience
How do our experiences help us learn? We’re often told that experience is the best way to learn. We might see this play out when someone gives us advice which we ignore, until experience teaches us …
Taleb: The Fooled by Randomness Effect and the Internet Diet?
In this brief article Nassim Taleb (of Black Swan fame) touches on information, complexity, the randomness effect, over-confidence, and signal and noise. THE DEGRADATION OF PREDICTABILITY — AND …
Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments
We tend to feel we’re more able and smarter than we really are. We think we’re above average drivers, we’re above average investors, and we make better decisions than everyone else. …