modelthinking

A Preliminary Discourse on the Study of Natural Philosophy. Herschel gave particular emphasis to what he called residual phenomena.

The missing variable is the reference point, the earlier state relative to which gains and losses are evaluated.

In wicked domains, the rules of the game are often unclear or incomplete, there may or may not be repetitive patterns and they may not be obvious, and feedback is often delayed, inaccurate, or both.

If you just want to get by in life, it’s fine to rely on the default set of narratives that saturate your culture. But the more original and ambitious your goals are, the more you need world-class narrative skills: both on the buy and the sell side.

Noah Smith, author of the economics Substack Noahpinion, often refers to a common trajectory in Chinese manufacturing as the “China Cycle”1:

1. A multinational company puts its factories in China, lured by some combination of cheap production, big contracts, and the dream of huge market opportunities.




2. China appropriates the multinational company’s te

Here is some more context. The US had 82% cumulative broad money supply growth over the past decade. Egypt had 638% broad money supply growth during that same time period. And the Egyptian pound underperformed the dollar by approximately that ratio; a decade ago a US dollar was worth a bit under 8 Egyptian pounds, and today it’s worth a bit over 50

Capital cycle analysis, however, focuses on supply rather than demand. Supply prospects are far less uncertain than demand, and thus easier to forecast.

‘By fighting you never get enough, but by yielding you get more than you expected.’

If the message went from parent to child, the child would update its beliefs using conditional probabilities, like the ones we saw in the teahouse example. If the message went from child to parent, the parent would update its beliefs by multiplying them by a likelihood ratio, as in the mammogram example.