Read the book “Fooled by randomness” by Nassim Taleb a while back. Taleb points out a lot of instances where we are fooled by randomness, particularly in trading, where there is a tendency to confound skill with randomness. I think the book is worth a read for anyone interested in randomness. IMHO, Taleb has not quite internalized what he talks about πŸ™‚ — in some sections, his arrogant tone is very obnoxious. I also felt some of his criticisms on statistics are misplaced. For instance, there has been quite a lot of work on extreme value theory, and even his “sampler” is pretty much mainstay statistics.

The book talks about a question that I find very interesting — When outcomes can be affected by randomness as well as the person’s effort, how much credit can be attributed to the person? Personally, I would like to believe that we are responsible for our own actions. Paul Graham summarizes it nicely — β€œ… If you’re trying to choose between two theories and one gives you an excuse for being lazy, the other one is probably right.” The notion of crediting success to a person is surprisingly ambiguous. If the person happens to be someone you know, you can definitely feel happy for them, but what does “the person” mean in other circumstances? Can you attribute the success to their features, their actions, their abilities? One approach is to compute the chances that each feature leads to success, and infer causality if the odds are low. To compound the problem, there is a survivorship bias where you tend to observe only the successful ones in most fields … you cannot really compute how many of the “losers” shared similar characteristics.

Choices are good/bad only in retrospect … you cannot label choices unless the event has transpired (and even if you do, you can identify good/bad only w.r.t. what you have observed till now). If you are in a situation where you took a chance and later realize that you made a mistake, dont try too much to find fault with yourself — maybe you were just unlucky.

Even if there are sufficient number of people who attempt similar things, just by chance, a couple of them are bound to be successful. Given all this confounding factors ;), is there any differentiator? Attitude. Attitude is fairly immune to randomness — heroes are heroic because of their attitude, not because they were successful. Reminds me of a quote by J.K.Rowling —
“It is our choices, Harry, that show what we truly are, far more than our abilities.” ~ Albus Dumbledore, Harry Potter and the Chamber Of Secrets.



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