
The illusion of control, and how to give it up - dnetesn
http://nautil.us/issue/87/risk/what-i-learned-from-losing-200-million-rp
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ta1234567890
"What I learned from losing $200 million"

"The option they bought from me"

The option was sold and backed by the bank at which the author worked, and he
didn't personally lose $200 million. Seems like he's still very much deep in
the illusion of control.

~~~
fennecfoxen
He designed the structure, participated in negotiating the deal, advocated for
it with both internal and external parties, was entrusted to care for the
deal, and is ultimately the primary responsible party for the deal in question
and for the company's gains or losses associated with the deal. The language
is not exactly a stretch.

~~~
ta1234567890
> ultimately the primary responsible party for the deal in question

Unless he personally lost $200 million, or he somehow needs to pay it back to
the bank, then no, he is not ultimately responsible for the deal at all.

What you are saying is that it might have felt that way to him because of his
involvement and that it's understandable to feel that way. And that's ok. But
it is also very tone deaf to use that language in an article about supposedly
dispelling the illusion of control.

~~~
Karunamon
I believe you may be conflating liability with responsibility.

~~~
ta1234567890
No. I'm saying that unless the guy owned the $200 million, and could've done
whatever he wanted with the money, then he's not the one that lost it.

In any case, here's the definition of liability: "the state of being
responsible for something, especially by law". So liability is responsibility.

~~~
Karunamon
I'm responsible for expensive systems at work, and many of them have a value
in excess of my entire net worth. At no point am I liable beyond possibly
losing my job if I screw up and damage those systems.

They are different words for a reason.

~~~
ta1234567890
Again, you are deviating the issue by bringing up the responsibility/liability
issue. I'm not arguing that.

If anything, you are essentially making my point. The guy in the story was not
liable for the $200 million (beyond his job), hence he didn't personally lose
the money, even though he says "I lost $200 million".

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ggm
If his "bet" hadn't converted to shorting with a government backer he'd have
learned a different lesson.

What does "control" mean in this context anyway when you have no skin in the
game?

~~~
watertom
He thought he had skin in the game, his bonus, and maybe his job, but both of
those items were also out of his control, he just didn’t understand that. So
much for that PhD.

~~~
mistermann
In many situations an accompanying PhD in psychology or neuroscience would be
useful.

EDIT - I'm throttled (I imagine due to comments like the following), so cannot
reply below:

> Nobody needs a phd to understand that circumstances and chance have a much
> bigger influence...

Some depth in psychology and neurology can also help one realize that you do
not actually know the thoughts and abilities of other people - rather, this is
how the mind evolved to perceive and model the external world (persons, etc),
and how the subconscious communicates _predictions_ based on that model to the
conscious mind.

So, I maintain my assertion that an understanding of how the mind (that which
_most substantially_ differentiates us from all other living things) works has
great utility.

~~~
Barrin92
it's a cultural malaise, not a scientific one. Nobody needs a phd to
understand that circumstances and chance have a much bigger influence, and
that the complexity of playing with hundreds of millions in global markets
goes far beyond the capacity of any individual. Picking up Goethe's Sorcerer's
Apprentice should be good enough.

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friendlybus
I don't get the finance mindset, you don't have access to any of the
information or actions that make the squiggly line of price go up or down.
Deriving models from natural phenomenon and applying them in a completely
unrelated field looks to be a gamble no matter how you cut it.

We are all going into the unknown all the time, predicting the future is not a
solvable problem, but you can train yourself to aim better from past attempts.

~~~
082349872349872
Living is much closer to playing cards than to playing chess.

~~~
friendlybus
Can you articulate that?

~~~
082349872349872
In chess, one has perfect information and the game is deterministic. In cards,
one is at the mercy of the deck and the distribution, so one plays according
to the odds.

~~~
friendlybus
Chess is an old game. Starcraft is the updated version of chess, with build
orders and hidden information. Starcraft retains the value of doing the right
thing even when blind, and building up logical series of actions from past
experience.

I don't know if you get to choose between chess and cards. In Starcraft (and
chess to a lesser degree) you still have risks in the unknown that can be
mapped as a probability function. For a given build order you may know that
the best unit is X, but there's still a chance your opponent produces a unit
that is counter-valent to the optimal.

In finance or cards you still have information about concrete events like ipo
launch dates and cards have chips that are always shown and a number of cards
remaining, that do not require probabilities to know or exploit.

Which one takes more prominence depends on the task at hand. And if one is
prominent, the other strategy is nestled inside and shrouds from above.

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anonmidniteshpr
Illusion of the _degree_ of control. Giving up agency and going towards
external locus-of-control like people who say everything is "God's will"
rather than proactively mitigating risks is another form of learned
helplessness.

You can't stop the sun from rising but you can stop the raccoons from using
your trash cans as a salad bar.

But let's face it Wall St. makes money betting with low latency (or advanced
notice) market data and news, insider info, and through complex chicanery to
hide strats about said betting. It's moving value around into different
peoples' pockets while maintaining a pretense of functioning as a funding and
value conversion platform.

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riffraff
> it occurred to me that Mexico might be willing to restructure its
> deal—selling us back the option it owned, and buying a new one—in a way that
> would lock in billions of profits for the country, while giving me a much
> needed windfall too

I don't get it, how would this be profitable for the bank?

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ericalexander0
Deming demonstrated similar with his bead experiment.

[https://youtu.be/ckBfbvOXDvU](https://youtu.be/ckBfbvOXDvU)

