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Risk

What Sharks Can Teach Us About Survivorship Bias

Survivorship bias refers to the idea that we get a false representation of reality when we base our understanding only on the experiences of those who live to tell their story. Taking a look at how we …

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When Safety Proves Dangerous

Not everything we do with the aim of making ourselves safer has that effect. Sometimes, knowing there are measures in place to protect us from harm can lead us to take greater risks and cancel out the …

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The Code of Hammurabi: The Best Rule To Manage Risk

Almost 4,000 years ago, King Hammurabi of Babylon, Mesopotamia, laid out one of the first sets of laws. Hammurabi’s Code is among the oldest translatable writings. It consists of 282 laws, most …

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The Probability Distribution of the Future

The best colloquial definition of risk may be the following: “Risk means more things can happen than will happen.” We found it through the inimitable Howard Marks, but it’s a quote …

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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 …

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Improving Your Luck

It isn’t enough to be good. You need luck. We tend to think that smart people make good decisions and stupid people make bad decisions and that luck plays very little role. That is until …

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Miracles Happen — The Simple Heuristic That Saved 150 Lives

“In an uncertain world, statistical thinking and risk communication alone are not sufficient. Good rules of thumb are essential for good decisions.” *** Three minutes after taking off from …

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Certainty Is an Illusion

We all try to avoid uncertainty, even if it means being wrong. We take comfort in certainty, and we demand it of others, even when we know it’s impossible. Gerd Gigerenzer argues in Risk Savvy: …

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Nassim Taleb on the Notion of Alternative Histories

We see what’s visible and available. Often this is nothing more than randomness and yet we wrap a narrative around it. The trader who is rich must know what he is doing. A good outcome means we …

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Genetically Modified: Where Does the Burden of Proof Rest?

This is from an interesting article in the New York Times on one man’s quest to find out the truth on genetically modified crops. “Greggor Ilagan initially thought a ban on genetically …

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Decisions Under Uncertainty

If you’re a knowledge worker you make decisions every day. In fact, whether you realize it or not, decisions are your job. Decisions are how you make a living. Of course, not every decision is …

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Nate Silver: The Difference Between Risk and Uncertainty

Nate Silver elaborates on the difference between risk and uncertainty in The Signal and the Noise: Risk, as first articulated by the economist Frank H. Knight in 1921, is something that you can put a …

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Taleb: The Risk Externalities of Too Big to Fail

Too Big to Fail” is a dilemma that has plagued economists, policy makers and the public at large. In Nassim Taleb’s lastest paper (with co-author Charles S. Tapiero) he takes a look. Abstract …

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