Farnam Street
Mastering the best of what other people have already figured out
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 …
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 …
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 …
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 …
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 …
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 …
“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 …
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: …
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 …
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 …
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 …
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 …
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 …