Kahneman and Market Efficiency
Markets are not efficient because human beings are not as rational as the Efficient Market Theory requires them to be. As Richard Thaler puts it, investors are Humans, not Econs. Daniel Kahneman is the...
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Is your child a football star?
Imagine this. Your child loves football and, as far as you can tell, he is very good at it. Of course, it may all be in his father’s eyes. So you would like to get an unbiased assessment of his real...
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Statistics and Causes
The Inverse Fallacy is often illustrated using Tversky and Kahneman’s cab problem (also reviewed in Chapter 16 of Thinking, Fast and Slow): A cab was involved in a hit and run accident at night. Two...
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Linda and racism
We use evidence to evaluate hypotheses (yes, I have said that before). Hard evidence is the result of a controlled, replicable experiment. All other evidence is soft. (Incidentally, hard evidence is...
View ArticleVALUEx
This is an excerpt from a video recorded at VALUEx Klosters in February 2012: I was talking about investment opportunities deriving from the Prior Indifference Fallacy, using Tversky and Kahneman’s cab...
View ArticleBlinded by Evidence – The paper
I have put together my thoughts on the Inverse Fallacy in this paper: Blinded by Evidence. I hope it is useful. Questions, comments, doubts are welcome.
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Where is Linda?
Remember Linda: we had a description of her and were asked to say whether she was more likely to be a bank employee or a Greenpeace supporter (I recently made a few changes to the post, treating the...
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Wimbledon’s winner
Last year I was watching the Wimbledon final with my elder son. A few days earlier – me being me – I had explained to him the meaning of the word ‘probability’: if you are completely sure that...
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The power of Why
As they fire their what happens if questions, small children regard the answer as perfect evidence, just as they have been doing in infancy on their own through repeated experiment. As a baby drops a...
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