

The overconfidence paradox - mblakele
http://www.economist.com/blogs/buttonwood/2009/07/the_overconfidence_paradox.cfm

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mrshoe
This just makes me glad that pg encourages hackers to be entrepreneurs. In my
experience, engineers could use a little dose of overconfidence, but that's
probably the last thing finance guys need.

I say this because most business/finance guys I know are alpha male former
jock types, while engineers are often brilliant and shy. There are, of course,
tons of exceptions.

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rottencupcakes
"The main aim of an academic is to achieve tenure; getting the same job for
life. This is not the mindset one needs to start a business."

Is that true? I'm not sure that's representative of most of my professors. For
example, rtm's one of my professors at school, and he's certainly not the
_only_ one to be involved in other ventures. Professors are involved in
cutting edge research - they need to make risky decisions, based on little
information, of what to invest their time in, knowing full well that most of
their research won't be overly influential. Sounds a lot like starting a
company to me.

Also, I'd argue that dropping out of school is no different than quitting your
day job. If you're starting your own company, you certainly don't need to
prove your credentials to anyone by having a degree - if you know enough to
start the company, more time in school would just be wasted time.

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nostrademons
"If you're starting your own company, you certainly don't need to prove your
credentials to anyone by having a degree - if you know enough to start the
company, more time in school would just be wasted time."

Starting a company is easy. Finishing one is hard.

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biohacker42
_The paradox of overconfidence is that it may be necessary for an
entrepreneur._

I think this is true. A lot of brilliant people don't start their own business
not for lack of ability or ambition or hunger but because we have such a
detailed and clear view of ALL the things that go wrong.

That's why pg's essays explaining just how little downside there is to failure
when you're young are so great.

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christofd
In Finance Theory/ Market Microstructure there is the concept known as "Noise
Traders" (Finance Theory, see Journal of Finance, is a playground for
mathematicians and physicists btw). Noise Traders create a market niche for
themselves by taking risks that other informed traders will not take, as such
they crowd out "normal traders". This allows them to command a higher return
on investment.

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jeffcoat
"markets can experience 25 standard deviation events"

Maybe. But what's the probability that your model is just wrong?

