Rational Irrationality

October 2, 2009

“The real reason that capitalism is so crash-prone”
Yet another take on the real explanation for the GFC – behavior that is individually rational can be collectively irrational.  Prisoners Dilemma and all that. 

Bet on it

September 11, 2009

I once had a long discussion with Ken Steiglitz about P=NP, while I was still at Princeton…. Ken was and still is sure that P must not be equal to NP. Okay, I said to Ken, what are the odds that they are equal? Ken said that he thought the odds were a million to one. I immediately suggested a bet. I did not ask him to “bet his life,” but I did ask for a million to one bet. I would put up one dollar. If in say ten years P=NP had not been proved, then he would win my dollar. If P=NP was proved in that time frame, then I would win a million dollars from Ken. Ken said no way. After more discussion the best bet I could get out of Ken was {2} to {1}.”


How to convey uncertainty

February 3, 2009

In current issue of Psychological Science:

Improving Communication of Uncertainty in the Reports of the Intergovernmental Panel on Climate Change
David V. Budescu, Stephen Broomell, and Han-Hui Por
When communicating information about uncertainty, the use of probability terms such as “unlikely,” “likely,” “probable,” or “virtually certain” may lead to confusion and errors. Participants assigned numerical values of probability to such terms used in a major 2007 report on climate change. Despite having access to the author panel’s guidelines for interpreting probability terms, respondents significantly overestimated the amount of imprecision in the climate-change findings being conveyed. An alternative approach to communicating uncertainty—one whose precision matches the precision of the evidence—would improve readers’ understanding of the findings and thereby enhance the foundation for sound policy decisions.

Relevant in many places including in particular intelligence analysis.