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An elegant illustration of the issue arose when we presented our findings to the senior managers of an asset management firm, prompting them to run their own exploratory noise audit. They asked forty-two experienced investors in the firm to estimate the fair value of a stock (the price at which the investors would be indifferent to buying or selling). The investors based their analysis on a one-page description of the business; the data included simplified profit and loss, balance sheet, and cash flow statements for the past three years and projections for the next two. Median noise, measured in the same way as in the insurance company, was 41%. Such large differences among investors in the same firm, using the same valuation methods, cannot be good news.
Noise
Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein
9. Nutpicking:
Cherry-picking the most outlandish members of the enemy side and presenting them as indicative in order to make the entire side look crazy. A common tactic on Twitter. Arguably, the entire culture war is just each side sneering at the other side's lunatics.
Everyone, a New MEGATHRE...
@G_S_Bhogal on Twitter
Condorcet Paradox: a special instance of Simpson’s paradox applied to elections, in which a populace prefers candidate A to candidate B, candidate B to C, and yet candidate C to A. This occurs because the majority that favors C is misleadingly divided among different groups.
MEGATHREAD TIME: In 40 T...
@G_S_Bhogal on Twitter
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