PROBLEMS
There are two kind of problems with posts.
Good Faith but Bad Topics: The first is people acting
in good faith, without inelegance, but totally
unacquainted with the topic so they reopen discussions
that have long been solved, and distract the rest. It is
the equivalent of someone in a math discussion forum
asking to define the square root and insisting on his
right to pose the question. Also includes people who…Posted an FAQ on this page.
https://docs.google.com/file/d/0B8nhAlfIk3QIOTV3Y3RhLVpLZVk/edit
Category Archives: Pdf
On the Difference between Binary Prediction and True Exposure With Implications For Forecasting Tournaments and Decision Making Research
On the Difference between Binary Prediction and True Exposure With Implications For Forecasting Tournaments and Decision Making Research
Nassim N. Taleb, Philip E. Tetlock
Abstract
There are serious statistical differences between predictions, bets, and exposures that have a yes/no type of payoff, the “binaries”, and those that have varying payoffs, which we call the “variable”. Real world exposures tend to belong to the variable category, and are poorly captured by binaries. Yet much of the economics and decision making literature confuses the two. variable exposures are sensitive to Black Swan effects, model errors, and prediction problems, while the binaries are largely immune to them. The binaries are mathematically tractable, while the variable are much less so. Hedging variable exposures with binary bets can be disastrous–and because of the human tendency to engage in attribute substitution when confronted by difficult questions,decision-makers and researchers often confuse the variable for the binary.
https://docs.google.com/file/d/0B_31K_MP92hUZFRrQk1VOExqMUE/edit?pli=1
Another place where fancy images of the brain allow neuroscientists…
Another place where fancy images of the brain allow neuroscientists to butcher mathematical/statistical rigor
https://docs.google.com/file/d/0B_31K_MP92hUSTRzbzZnQUVjbm8/edit
via Another place where fancy images of the brain… – Nassim Nicholas Taleb.
On the Difference between Binary Prediction and True Exposure with Implications for Forecasting Tournaments and Decision Making Research | SSRN
Revision
On the Difference between Binary Prediction and True Exposure with Implications for Forecasting Tournaments and Decision Making Research
Nassim Nicholas Taleb
NYU-Poly; Université Paris I Panthéon-Sorbonne – Centre d’Economie de la Sorbonne (CES)
Philip E. Tetlock
University of California, Berkeley – Organizational Behavior & Industrial Relations Group; University of Pennsylvania – Management Department
June 25, 2013
Abstract:
There are serious differences between predictions, bets, and exposures that have a yes/no type of payoff, the “binaries”, and those that have varying payoffs, which we call the “vanilla”. Real world exposures tend to belong to the vanilla category, and are poorly captured by binaries. Vanilla exposures are sensitive to Black Swan effects, model errors, and prediction problems, while the binaries are largely immune to them. The binaries are mathematically tractable, while the vanilla are much less so. Hedging vanilla exposures with binary bets can be disastrous — and because of the human tendency to engage in attribute substitution when confronted by difficult questions, decision-makers and researchers often confuse the vanilla for the binary.
Number of Pages in PDF File: 7
Keywords: Predictions, Risk, Decision, Judgment and Decision Making, Fat Tails
working papers series
Why more news means more noise, not more signal…
Why more news means more noise, not more signal -Technical derivations. Ignore the math and see that the st arrives to the desktop. We need strong filtering.
The Noise Bottleneck or How Noise Explodes Faster than Data(pdf)
via Why more news means more noise, not more… – Nassim Nicholas Taleb | Facebook.