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The danger, and you see it often in investing, is when people become too McNamara-like – so obsessed with data and so confident in their models that they leave no room for error or surprise. No room for things to be crazy, dumb, unexplainable, and to remain that way for a long time. Always asking, “Why is this happening?” and expecting there to be a rational answer. Or worse, always mistaking what happened for what you think should have happened.
The ones who thrive long term are those who understand the real world is a neverending chain of absurdity, confusions, messy relationships, and imperfect people.
Does Not Compute
collabfund.com
Perverse Incentives Select for People Who Are the Best at Exploiting a Given System
Summary:
The original deans and administrators burn out due to their dislike of the US News and World Report rankings and are replaced by individuals driven by ranking success.
This shift reflects a difference in mentality between valuing money as a means of support versus valuing money as the sole purpose of life. Similarly, pursuing publications and citations for a job versus making them the ultimate goal shows a significant distinction.
However, these differences are connected through a temporal dynamic where initially people adapt their behavior to succeed in a flawed system.
The system then filters out those who can best exploit it, resulting in the selection of individuals with specific values.
Transcript:
Speaker 2
What happens later on, the original deans and administrators burn out because of how much they hate the US news and rule report rankings, and they get replaced by people who are all it. They think the only point is to rise in the rankings. And those people don't hold back. They only have one target. I think something similar is the difference between so realizing I need a lot of money in order to a decent amount of money to support my family, but not thinking money is the point of life. And similarly, realizing that getting a decent number of publications and citations is necessary for a job versus thinking the goal of my life is to max out citations. And for me, there's a huge gulf between those things.
Speaker 1
Well, here's where I think they're connected because I see the difference and I understand the difference you're talking about. But I think the difference is that is this temporal dynamic, right, where you start out with, let's say, perverse incentives and people saying, well, I don't necessarily value these Things, but I have to shape my behavior in order to succeed in this system. But the thing is, the system being the way it is creates a filter. And the people who are the best at figuring out how to operate in that are the ones that then end up being successful. And they're the ones that teach the next generation or emulated by the next generation. And over time, the people for whatever reasons, psychologically or behaviorally or ever their path is, are best able to exploit the system are going to be able to thrive in it. And I think that because of that, you end up selecting for people with certain kinds of values, because they're going to be the people who there's always exceptions, but are going to Be best able to thrive in this kind of thing.
Paul Smaldino & C. Thi Nguyen on Problems With Value Metrics & Governance at Scale
COMPLEXITY: Physics of Life
People have more accurate models of people in close proximity than they do of people far away (socially)
Summary:
People have a good understanding of their friends and are accurate in predicting their behavior.
This is shown by their ability to accurately predict election results based on their friends' voting preferences. However, biases arise when people are asked to judge unfamiliar populations.
These biases can be attributed to the structure of their personal social networks.
The more biased their social networks are, the more biased their estimates of the general population will be.
Transcript:
Speaker 1
Oh yeah, after seven years of research on this paper, that people actually have a quite a good idea about their friends, family, acquaintances, people that they meet on every day basis And then we'd whom they need to cooperate with, learn from or avoid. And that they're actually not that not as biased as a traditional social psychology would like us to think. And we see that because when we ask people about their friends, we see that this predicts societal trends quite well. So in one line of research, we asked a national probabilistic sample of people to tell us who their friends are going to vote for. We average those things across the national sample and got better prediction of election results than when we asked people about their own behavior. And this would not have happened if people were biased in reporting their friends. They must have told us something that must have given us information that's accurate and that's goes beyond their own behavior in order for that to happen to predict the elections better. And by now we saw that in four further, so we five elections all together in the US 2016 in France, the Netherlands, the Sweden and US 2018, and we hope to predict again 2020. So things like that tell us that people are actually pretty good in understanding their social circles and then the apparent biases show up when people are asked to judge people that They don't know so well. So when I'm asked to tell you something about people in another state or another country or people from another socioeconomic cluster, which I don't know well, then I am likely to have Some biases. But these biases we show can be explained by what I know about my friends. So if you ask me something like that, I will really try to answer your question honestly. And to do that, I will try to recall from my memory everything that I know about our social my social world. But you know, if I'm surrounded by rich people like here on the East side of Santa Fe, it could be very difficult to imagine in what poverty people can live in other parts. And so even if I'm trying my best to recall, you know, the most poor person I know, I might never recall such poverty that actually exists in the world. And when asked about the overall level of income in the US, I'm likely to overestimate the overall level. And similarly, if you are poor, you're people who are poor might have problems imagining the wealth of really rich people and they will typically underestimate the wealth of the country. So okay, so let me let me summarize this. So this piece actually suggests that people are not that biased when it comes to judging their immediate friends. They have a lot of useful information about their friends and pretty accurate. The bias is show up when people are asked about other populations that they don't know so well. And they can be mostly explained by the structure of their own personal social networks. The more biased your social networks are, the more biased your estimates will be about the general population.
Mirta Galesic on Social Learning & Decision-Making
COMPLEXITY: Physics of Life
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