An interesting talk based on the book “The Success Equation: Untangling Skill and Luck” by Michael Mauboussin. Mr. Mauboussin is managing director and head of Global Financial Strategies at Credit Suisse. It is a long talk for about an hour.
Ms. Smeets’ great presentation of scientists and media mistakes of mixing up correlation with causality. It is what I warned traders and quants to-be all the time – if you do not know what causes the correlations, expect the statistical biases may disappear fasting than you think.
Real life experiment with people on rational decision making.
Our human nature plays a big part in our lives on the decisions we make. Traders are especially haunted by our bias towards risk aversion as losses of any kind is almost automatically translated into a form of pain or threat. Being able to overcome that in one situation does not mean that you can make the right decision next time in a different situation. Hence our struggle as a trader against our human nature is a fight we have to carry on all the time.