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Stochasticity AKA Randomness

October 18, 2011 Leave a comment

Everyone will listen to http://www.radiolab.org/people/jay-koehler/#  and achieve enlightenment… OR ELSE!!

I am Randomness!

What do you think?

 

Also, here is a brief article by Jonathan Clements on interesting stuff that is good to know:

“IF YOU WANT to improve your investing, settle into an armchair, grab the remote — and spend the next few weeks watching the NCAA basketball tournaments.

True, this might not endear you to your family. But the fact is, there are intriguing parallels between the foibles of basketball and the behavioral mistakes investors make.

As you cruise the channels, what should you look for? Academic and financial experts offer up these three basketball-inspired investment insights.
— Keeping your cool. Both the men’s and women’s NCAA tournaments begin this week. If you think stock jockeys are obsessed with finding the next hot thing, just listen to the basketball commentators.

You will probably hear the television announcers declare that one or two of the players have the “hot hand” because they have scored on, say, their last three shots. The implication: Their teammates should feed them the ball, because there’s a good chance they will keep knocking down the jump shots.
Academics, however, would beg to disagree. A study that appeared in Cognitive Psychology in 1985 looked at the shooting record of the Philadelphia 76ers during the 1980-81 season, a squad that included the great Julius Erving. The study found that, contrary to popular belief, the probability that the players would score on their next shot was, on average, slightly lower following a successful shot.

But what about those unusual hot streaks? Statistically, hitting three or four shots in a row — or beating the market in consecutive years — just isn’t that unusual. Indeed, if you and a bunch of friends each flipped a coin 20 times, half of you would likely get four heads in a row.
“Fund managers can look like they’re hot or like they’re a market beater,” says Thomas Gilovich, co-author of the “hot hand” study and a psychology professor at Cornell University. “But you swap out of your underperforming fund and into the hot fund at your peril. Given that the market is pretty efficient, past performance just isn’t a good guide.”

Why do people reach grand conclusions based on skimpy data? Part of the blame lies with so-called confirmation bias. If you are convinced you’re a great stock picker or that basketball players can “get hot,” you will likely find the necessary proof.
“The brain looks for patterns,” says Meir Statman, a finance professor at Santa Clara University in California. “And once you decide there is a pattern, you will look for confirming evidence and you will dismiss contradictory evidence as a fluke.”

— Expecting less. While it’s hard to say definitively that some fund managers are superior to others, some basketball teams clearly are more skillful. Yet fans of weaker teams are forever hopeful.

How often does a college basketball team that’s trailing at halftime come back to win? Allan Roth, a financial planner with Wealth Logic in Colorado Springs, Colo., often puts this question to audiences. He says people typically guess that between 30% and 60% of teams make a comeback.
In fact, Mr. Roth looked at over 3,300 college games played in November, December and January and found that, among teams trailing at the half, less than 20% came back to win. Why do folks think the number is so much higher? Mr. Roth figures there are two reasons.

First, we tend to be overly optimistic. “It’s America,” Mr. Roth says. “We believe in the underdog — and we believe in the small investor.” Even though studies suggest that most investors lag far behind the market, we like to think we can beat the odds and come out on top — which helps explain why market-tracking index funds still aren’t that popular.

Second, comeback victories tend to get the most media attention, so they stick in our minds. “It’s the same thing with hot mutual funds and hot money managers,” Mr. Roth says. “Because investors only hear about the winners, they think it’s easy to beat the market.”
— Playing the odds. Investors hate the idea of losing. So, too, do basketball coaches — and it can lead both groups to be a little irrational.
Suppose a team is down by two points and it has time for one last shot. What play should the coach call? Let’s say there’s a 50% chance of scoring on a two-point shot and pushing the game into overtime, but only a 33% chance of making a three-point shot and getting the immediate win.
Nonetheless, the three-point shot is the rational choice. The reason: If the team makes the two-point shot, it still has to play overtime, where its chances of winning are 50%. In other words, by opting for the two-point shot, the team is looking at having to win on two 50% gambles, which means its overall odds of winning are just 25%.

Yet coaches usually go for the two, notes Richard Thaler, an economics professor at the University of Chicago. Chalk it up to our aversion to regret. If the coach goes for the three and misses, not only will the team suffer an immediate stinging loss, but also critics will vilify the coach as “greedy” and “reckless.”
Similarly, investors are often too worried about looking foolish in the short term. Stocks, like the three-point shot at the buzzer, may be the best bet. But many investors shy away from stocks, because they worry about stinging short-term losses and the pangs of regret that accompany them.
“If you believe there’s a premium to owning stocks, you’re crazy not to own them if you’re a long-term investor,” Prof. Thaler argues. “You shouldn’t be so bothered by day-to-day or month-to-month volatility.”

Battling Bad Science

October 10, 2011 1 comment

Sorry about the previous link.  Try this:  http://www.ted.com/talks/ben_goldacre_battling_bad_science.html

What do you guys think about this?

Categories: Links for Discussion

Lecture 10/6: Paley Continued; IBE vs. Analogy

Instead of an inference to the best explanation, some people believe that Paley’s argument is best read as an instance of an argument by analogy. True, an analogy between functioning organs and artifacts features in a lot of what Paley says. But I think if Paley’s argument were essentially an argument by analogy, then it would be all the weaker for it. As we shall see later on, I think the same of those who read Aristotle’s many references to “as in art, nature” as confirmation that his teleological arguments are essentially arguments by analogy. There are formal differences between inference to the best explanation arguments and arguments by analogy.

The strength of an argument by analogy depends on the degree to which the item or phenomenon in question resembles the analog. Winnie the Pooh somewhat resembles real-world, honey-loving bears but not enough to warrant the conclusion that real-world bears are made of cotton stuffing. Do watches sufficiently resemble living organisms to warrant the conclusion that the latter are designed because the former are? Probably not, if we regard the variety of extant living organisms. Watches are made of metallic cogs and wheels, have glass faces, and fit around one’s wrist. Koalas are endothermic, climb trees, and draw crowds at the San Diego Zoo.

Paley’s argument fares much better as an inference to the best explanation than as an argument by analogy.  Sure, the analogy between watches and living organisms plays a central role in the inference to the best explanation—but as a means to strengthen the inference to the best explanation inference from complex adaptation to designer, not as a analogy between the features of watches and living organisms. In other words, the relevant feature in common between watches and living organisms is their complexity and well-suitedness to the function that they serve. If designers are the best explanation for highly functioning artifacts, they will be even better explanations for the even more complex and highly functioning forms found in nature.

All these various arguments for the existence of God remind us of how many different religions there are. And,
that reminds me of a joke apparently written by Emo Philips:

Once I saw this guy on a bridge about to jump. I said, “Don’t do it!” He said, “Nobody loves me.” I
said, “God loves you. Do you believe in God?”
He said, “Yes.” I said, “Are you a Christian or a Jew?” He said, “A Christian.” I said, “Me, too!
Protestant or Catholic?” He said, “Protestant.” I said, “Me, too! What franchise?” He said,
“Baptist.” I said, “Me, too! Northern Baptist or Southern Baptist?” He said, “Northern Baptist.” I
said, “Me, too! Northern Conservative Baptist or Northern Liberal Baptist?”
He said, “Northern Conservative Baptist.” I said, “Me, too! Northern Conservative Baptist Great
Lakes Region, or Northern Conservative Baptist Eastern Region?” He said, “Northern
Conservative Baptist Great Lakes Region.” I said, “Me, too!” Northern Conservative Baptist Great
Lakes Region Council of 1879, or Northern Conservative Baptist Great Lakes Region Council of
1912?” He said, “Northern Conservative Baptist Great Lakes Region Council of 1912.” I said,
“Die, heretic!” And I pushed him over.

 

Here is Richard Dawkins on the Watchmaker Argument.  He seems to be confused as to whether the Watchmaker Argument is an IBE or Analogy.  Is he following the principle of charity?  Does he rebut the strongest version of the argument?

Why Critical Thinking is Important

September 22, 2011 Leave a comment

Critical thinking is about examining the reasons one has for a position.  Sometimes, one adopts a position, and then later encounters reason to suspend judgment.  If we refuse to think critically, and hold steadfast to our prior beliefs, perhaps because we can’t admit we were wrong, terrible things can happen.

Troy Davis

Massimo Pigliucci says, “The thing to understand, though, is that critical thinking – like science itself – doesn’t come natural to human beings, it is a skill that needs to be acquired. We naturally tend to jump to conclusions based on very little evidence, rationalize our theories to the utmost degree, and stick with the wrong idea long after it has been shown to be false.”  Keep this in mind as you learn the skills for critical thinking, and while you watch these videos.

This is a four part documentary (about 45 minutes long total) about Troy Davis, who was executed yesterday for the murder of a Georgia police officer in 1989.  Perhaps more critical thinking could have saved his life.

You Should Major in Philosophy!!!

September 12, 2011 1 comment

 

 

Doesn’t it seem glorious?

Practice Questions

The following are practice questions over the material covered in Week 1.  They may represent potential exam questions.  You are not required to answer these questions and turn them in, but feel free to leave your answer in the comments.

1.  Matching
a.  Ethos                  1. Reason
b. Pathos                 2. Authority
c.  Logos                 3.  Emotion

2.  Fill in the blank

An argument is a __________ series of _________________ that are intended to give ________________ for another ____________________.

3.  Short answer.

Bob gives a poor argument in support of his position, and Alice says, “your argument is simply false.”  Suppose Bob’s argument is:

1.  All planets are massive enough to clear their orbits. (this is true)

2.  Pluto is not a planet.   (this is true)

3.  Therefore, Pluto is not massive enough to clear its orbit.   (this is true)

Here’s Neil DeGrasse Tyson trying to justify why he demoted Pluto from Planethood.

But these investigative journalists suspect something more sinister…

That’s right… Neil deGrasse Tyson actually commandeered the Large Hadron Collider, launched it into deep space, and Pluto was history…

 

Ahem.  What should Alice have said to Bob, and explain the difference to her.

 

Critical Thinking Video

August 28, 2011 4 comments

This is a video about critical thinking.  It is 40 minutes long, and the narrator sounds kind of smarmy, but it is filled with some great information!  Check it out… or else.

 

 

Good stuff.  What surprised you?  Do you disagree with anything he said?