Nassim Nicholas Taleb says that in situations where there is risk (particularly the potential for low probability/high negative impact events), and asymmetric information regarding that risk (so a select group of individuals have a better understanding of the probabilities and impacts of that risk), then there is the danger of potentially catastrophic risk-taking. This is […]
I posted recently about Professor Stanley Fish getting rid of almost all of his books, and how I couldn’t imagine doing it. As I said, Surrounding yourself with books is representative of a continued pursuit of something. Shane at Farnam Street agrees, at points to Taleb in The Black Swan: Only a person who doesn’t understand […]
When deciding on an action, we often must consider how the actions chosen by others impact what is best for us. Think of a pitcher in baseball. Is it better to throw a fastball or a change up? Well, it depends. If the batter is expecting fastball, then a change up would be ideal. But if […]
Recently stumbled across a great resource from The Foundation for Critical Thinking. More than ever, the role of critical thinking is essential to our discourse – and particularly in economics. How we discuss ideas is a direct product of how we think about those ideas. In particular, critical thinking is about: raising appropriately, clearly defined questions; […]
How good are humans at identifying the role of randomness? Not very, apparently. As individuals, we like to look for concrete causes when events occur. We naturally pick out patterns in observations. We search for explanations, relationships, correlations – anything to help us make sense of how the universe works. It’s an instinctual endeavor: You […]
Related post from a week or two back (and theme) here. It really is important to take time for your mind to shut off and recharge.
When working with economic models, we typically need to characterize the behavior of some agent or group of agents. An agent may be a consumer, an investor, a firm, or a government – essentially, a decision-making actor. So, to discuss an agent’s ability to make decisions, what should we assume about that ability? These assumptions […]