Do not socialize with people much richer than you; but if you do, do it in your own territory (restaurants you can afford, wine, etc.)
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(As the tribe might have noticed, I am adding a list of 99 prescriptive heuristics, with rationalization, as a short standalone addition to the INCERTO).
via Do not socialize with people much richer than… – Nassim Nicholas Taleb.
Taleb writes thus: “Many have the illusion that ‘because Kolmogorov-Smirnov is nonparametric’, it is therefore immune to the nature specific distribution under the test….”
What does that mean? The Kolmogorov-Smirnov test is a standard measure of how a certain data sample compares with a reference probability distribution. It focuses on the largest observed distance between the actual set and the corresponding figure in the referenced distribution. If the largest observed distance is acceptably low, then presumably the one is acceptably conformable to the other. This test is widely said to be “non-parametric,” which in this context means that it is free of question-begging assumptions.
So what Taleb contends here is that the nonparametric nature of that test is an illusion. This is part of his effort to discredit patch-up jobs. In his view, Kolmogorov-Smirnov is one of many ways in which quants persuade themselves that they at last have a fix on how fat those fat tails can really get. If true, this would allow the quants to return to their pre-crisis mechanical ideas about risk management. But it isn’t, and they shouldn’t.
Or, as Taleb puts it at his most eloquent, “Shkmolgorov-Smirnoff.” Though I’m not sure I could manage the pronunciation of that.
‘Optionality’ involves recognizing the unexpected and unpredictable consequences of trial and error tinkering. Most inventions and discoveries are chance events; intelligence is involved in recognizing a good thing when you see it, even though you weren’t expecting it.
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So intelligence is employed in employing optionality, rather than needing a correct theory that explains why everything is the way it is, usually impossible, or predicting the future. Taleb’s recommendation is to rely on empirical observation as much as possible and to be skeptical about theories. Theories come and go, but the empirical remains stable. Weight training, properly done, will increase muscle size and strength. We don’t know why. Theories as to why are fragile. Today you get one explanation, tomorrow a new one.
via Taleb, Mystery and Conservatism | The Brussels Journal.
HatTip to Dave Lull
If the professor needs to prepare to give a class, don’t attend. People should only teach what they have learned organically… or get another profession.
(note the “needs to”… many here mistook it for should not prepare.)
via If the professor needs to prepare to give a… – Nassim Nicholas Taleb.
Two very practical heuristics I picked up from Danny Kahneman
1. When positive, show net, when negative, show details.
2. Manipulate anchor to what did not happen rather than to what did happen.
via Two very practical heuristics I picked up from… – Nassim Nicholas Taleb.