
The Psychology of Prediction - yarapavan
https://www.collaborativefund.com/blog/the-psychology-of-prediction/
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yarapavan
Daniel Kahneman was once asked how we should respond when we make an analysis
mistake. He said:

Whenever we are surprised by something, even if we admit that we made a
mistake, we say, ‘Oh I’ll never make that mistake again.’ But, in fact, what
you should learn when you make a mistake because you did not anticipate
something is that the world is difficult to anticipate. That’s the correct
lesson to learn from surprises: that the world is surprising.

That last line should be written on forecasters’ walls: The correct lesson to
learn from surprises is that the world is surprising.

~~~
themodelplumber
Isn't this why we run simulations and calculate odds? The world is surprising.
Still, if you stick to the odds and something breaks, maybe your model really
needs tweaking. We have, wisely, gone back and changed thousands of formal
models in fields from physics to economics to social science for this reason:
We don't want to make that mistake again. And in many of those cases we didn't
make that particular mistake again.

So it seems like while it's worth understanding that the world is surprising,
this doesn't diminish the value of fixing a broken model or preparing better
next time.

~~~
bo1024
I think this shows the difference between a regime like physics where we
expect models to generally work, versus another kind of regime like the stock
market where it's unclear whether they work.

The point of the above quote is that in some regimes, models [that we can
currently build] don't work. So the lesson to take away from a bad prediction
isn't "this model is bad", it's "any model I build will be bad". There might
not be enough signal in the data you have (or even is possible to have). It's
exacerbated in cases where it's hard to assess the model's performance, e.g.
the stock market mostly goes up so any model that predicts that will look
pretty good most of the time.

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AznHisoka
I only take predictions seriously if you have some stake in the outcome.
Otherwise, it's easy to just casually predict something outrageous like "Trump
will probably quit before his term is over", and turn around and say you were
kidding if it's not right, but take all the credit if it comes true. Go put
$10,000 on some prediction market contract, or make a side bet with someone..
anything.

One of my favorite quotes about predicting comes from Taleb: "Don't tell me
what you think, tell me what you have in your portfolio."

~~~
igor47
Predictions can be a tool to test your understanding, I guess maybe like a
fantasy investing site to see how well you would do if you were investing real
money.

I've been playing a bunch of Metaculus[1] recently for this reason.

I do agree that there are too many folks (pundits and the like) who make
predictions all the time with no consequences, and I wish there was a way to
hold bad predictors to account. I've thought about making tools that
automatically or with crowd sourcing track the predictions of public personas.

1:
[https://www.metaculus.com/questions/](https://www.metaculus.com/questions/)

~~~
hhs
That's a useful website, thanks.

Recently, I had a similar question about websites or repositories that keep a
track record of predictions/promises. If interested [0], one individual
pointed to Long Bets.

[0]:
[https://news.ycombinator.com/item?id=20500998](https://news.ycombinator.com/item?id=20500998)

~~~
klenwell
Long Bets has the famous Buffet/hedge fund wager, as well as the Ted Danson
Red Sox World Series/USMT World Cup wager. Both now settled! But otherwise,
it's looked a bit moribund lately to me.

Here's a more active prediction site in this vein associated with Philip
Tetlock of Superforecasting fame:

[https://www.gjopen.com/](https://www.gjopen.com/)

~~~
hhs
Excellent, thank you.

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NumberCruncher
Title should be "The Psychology of Guessing".

~~~
AceyMan
"Predictions are hard, especially about the future." —Yogi Berra, MLB HoF &
American Philosopher :-P

