One of the most useful exercises in our Decision Analysis class at Stanford was teaching people to widen their ranges of uncertainty. We had an exercise called the "almanac test" where we had students give their 10-90 ranges on 20 facts like how long is the Amazon river and how many American soldiers died during the American Revolution. The typical finding was that around 50% of the facts came across as surprises that people had assigned a 10% chance or less than 1% chance of happening. And these were historical facts. Now imagine what happens when people confidently make guesses about a truly uncertain future.
Excellent post. I wish the ability to think in probabilities will be nurtured in every young mind and every investor. We wrote about its importance as well, but your frame it so much deeper.
I loved the part about intellectual humility. The fact is that in every domain, the more you know, the more you realize how much there is that you don't know; you develop the capability to figure out the most probable outcome though-and that's huge. Staying intellectually humble and nimble is the best way to keep an open mind, keep learning, get better and stay grounded.
One of the most useful exercises in our Decision Analysis class at Stanford was teaching people to widen their ranges of uncertainty. We had an exercise called the "almanac test" where we had students give their 10-90 ranges on 20 facts like how long is the Amazon river and how many American soldiers died during the American Revolution. The typical finding was that around 50% of the facts came across as surprises that people had assigned a 10% chance or less than 1% chance of happening. And these were historical facts. Now imagine what happens when people confidently make guesses about a truly uncertain future.
The opportunity for the win-win you described will save a lotta heartache and hedge a larger, similar mistake instance in the future.
Anything treated as an investment deserves humility.
Excellent post. I wish the ability to think in probabilities will be nurtured in every young mind and every investor. We wrote about its importance as well, but your frame it so much deeper.
I loved the part about intellectual humility. The fact is that in every domain, the more you know, the more you realize how much there is that you don't know; you develop the capability to figure out the most probable outcome though-and that's huge. Staying intellectually humble and nimble is the best way to keep an open mind, keep learning, get better and stay grounded.
Thank you!🙏