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Seek Upside Risk

I love the spirit of this post, but all the focus on expected value raised some alarms in my head. 

Maximizing the expected value in ordinary (financial) betting leads to bad decisions (St. Petersburg paradox), and it can do the same in other areas of life. I can see you know this intuitively, because you mentioned Pascal's Mugging. Just letting you know that there's math that accounts for this, too:

To avoid wasting life on Pascal's Mugging (or going broke on bad bets), we maximize the expected logarithm of value (Kelly Criterion), because we get diminishing utility from higher amounts of the same thing.

is scope insensitivity really a brain error?

No, that's not my position. Read it again and see if there's a nuanced view that better fits my words.

is scope insensitivity really a brain error?

You're right, I did miss that in your last paragraph, my bad.

It shouldn't matter if they care more about human suffering: as long as bird-lives have nonzero value to them (and they revealed this by pledging any money at all), then the money donated should scale with the lives saved.

If they couldn't afford more, then they already made a mistake in donating their maximum to the first arbitrary opportunity presented. That's like a broader kind of scope insensitivity - valuing all large-sounding benefits exactly the same.

And, if they only pledged money to make themselves look good, they still failed due to scope insensitivity, because it looks bad to value 200,000 lives as little as 2000.

Anyway, as jimrandomh said, other examples are easy to find. I wouldn't believe in scope insensitivity if I'd never heard anything like the bird example, but I have.

is scope insensitivity really a brain error?

scope insensitivity would only be irrational if saving birds were the only criteria in play. to save more birds, give more money. but this is almost never the case

The question was designed to isolate those two factors. You can claim the respondents all had secret, rational reasons to answer the way they did, but there's no evidence of that, and you haven't even proposed what those reasons could be.

"The Holy Grail" of portfolio management

In that case consider shorting the index (thus effectively setting β = 0.0) along your investment

Is this assuming you already have other investments with high beta, and you just don't want more beta with your new stock pics?

Charting Is Mostly Superstition

Thanks gilch, I've got a lot to look into but I'm kind of excited to try this stuff out. Your series + some other materials I've been watching has convinced me that finding alpha isn't as impossible as I thought.

Do you currently use any strategies whose edge you've confirmed by automated backtesting?

Market Misconceptions

Thanks, this is very valuable. I'll have to think about this some more; I don't think I've internalized it enough yet:

If a market was 100% efficient, the price moves would be 100% unpredictable

Charting Is Mostly Superstition

I tried out a few of these. Strongest correlation I found was between SPY-1 and NDX, fwiw. It feels like I shouldn't be doing so much of this work in spreadsheets though, because of the time cost. Is this the kind of thing Quantopian is mainly used for?

Market Misconceptions

Also, are you sure your definition of beta matches Wikipedia's? I'm not seeing how they can be the same thing

The Mind: Board Game Review

everyone's sense of "speed" is quite different.

There's an obvious Schelling point for that though ;) once three of us found it, our performance drastically improved, but I think I missed most of the excitement you're describing

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