Sublime

Every group of people I ask thinks the world is more frightening, more violent, and more hopeless—in short, more dramatic—than it really is.

Quantifying this updated probability is an application of Bayesian inferencing. We’re no longer asking the simple, one-part question “What is the probability that the person with a pocket protector is an engineer?” Instead, we’re asking the compound question “What is the probability that the person with a pocket protector is an engineer, given the

Just as I have urged you to look behind the statistics at the individual stories, I also urge you to look behind the individual stories at the statistics. The world cannot be understood without numbers. And it cannot be understood with numbers alone.

Consistent overweighting of improbable outcomes—a feature of intuitive decision making—eventually leads to inferior outcomes.

And some forecasts are meant to comfort

The consumer of VaR reports is led to believe that the numbers are reliable because smart people have gone to a lot of trouble to work them out. The numbers are only as good as the assumptions underlying them.

If you have ever heard a financial expert refer to the stock market using terms like alpha, beta, or standard deviation, you have witnessed reductive bias in action.

The general tendency to overestimate

we make a forecast with the facts that are in front of our nose.