Physicist, Startup Founder, Blogger, Dad

Saturday, February 11, 2006

Taleb podcast: What do we know?









Dave Bacon said...

I'll bet (with only 50% confidence) that physicists are actually even worse than economists and stock analysts. I mean, if there is anything that physicists are known for it is going into other fields and thinking they can be just as good at that field as they were in physics! Lack of confidence is not allowed in physics ;)

Another interesting question is how well repeated exposure to random events helps your ability to produce confidence levels. It would be interesting to see how poker players, who have repeated exposure to calculating odds and then seeing how these calculations pay off in practice, do in assigning confidence intervals.

steve said...

Physicists as a population might exhibit selection bias for *general* overconfidence, but perhaps not specifically for overconfidence in dealing with noisy data, the way a stock analyst might be. In fact, the other way around. If a physicist is caught over-generalizing from some statistical data they will endure a good thrashing from their peers.

I think it's clear that good poker players have trained themselves to understand confidence levels when dealing with cards, just as scientists have trained themselves to do so with data from lab experiments. How well people then generalize that training is a good question. Jim Simons, Ed Thorpe and Claude Shannon would likely claim that scientists are *good* at extending that discipline to financial markets. (At least, they have an advantage over other people without similar training.)

STS said...

Thanks for the link. Taleb has a good point and is a fun speaker.

PS said...

Funny.... Tableb is so confident that his fun will make money :)

coder said...

I thought he made a rather bold assertion: securities analysts have the worst forecasting record. What other occupations/fields/problems were tested? How were they tested? I find it improbable that he is referencing a valid study, since this assertion is so poorly circumscribed. It is probably merely a snide remark about an easy target (rich Wall Streeters!)

Further, the assertion that amateurs are overconfident in their knowledge of trivia (how many corrolas were sold last year), is quite different than the assertion that experts are consistently overconfident, or that users of forecasts are unaware of the relevant standard errors.

Carson Chow said...

Instead of confidence intervals, an even better way is if we relayed information in a Bayesian way. You just give your prior and compute your posterior probability. This way, your assumptions will be on full display.

Anonymous said...

Poker outcomes follow a normal distribution market returns do not good poker players take advantage of overbets by players and pot odds. Security analyst are sales men is Gs calling for 180 dollar oil in July and reversing to seventy dollar oil in October. Physcist for the most part change hypothesis based on data your ignorance is funny you probably believe in global warming because you observed a hot summer the ludic fallacy is modern mans new religion

Be sure to take your thougts with a grain of salt

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