The decision maker and the executor operates with different cognitive models.
The decision maker
The decision maker operates within an environment of incomplete information. He takes in conflicting signals from the environment to figure out the underlying Markov Chain that holds his environment altogether.
A successful decision marker minimizes the price paid for knowledge of each section of the Markov Chain.
Each success unlocks more resources that could be redeployed to this activity.
Inner fortitude is the primary trait required to navigate the high failure rate inherent to the nature of this activity.
Perpetuate accumulation of mental models from different domains reduces taken to form judgement while increasing overall batting average.
The executor operates within an environment that has been made predictable by the activities of the decision maker.
He is predisposed towards systems, structures and processes. A successful executor measures and optimizes with the goal of increasing yield from a well defined process while minimizing costs.
Disciplined consistency is the primary trait required to ensure continued excellence in this repetitive activity.
A strong decision maker profile with a weak executor profile will feel repressed/bored when forced to operate as an executor in a structured environment.
An strong executor profile with a weak decision maker profile will feel overwhelmed when required to operate within an unstructured environment.
- Ability to see things as is when others are in mass hysteria
- Ability to do nothing most of the time
- Practice of constantly accumulating more mental models
- Focus on process not outcome
- Minimizing cognitive behavioral biases
Risk versus uncertainty
- Risk can be mathematically modeled to yield a probability
- uncertainty cannot be mathematically modeled
Conditions for quality data
Why google’s Search data is better than Facebook profile data
- subject feels she has privacy privacy
- subject feels she is not judged
- subject sees tangible benefit from being honest
The hedgehog versus the fox
- The hedgehog approaches reality through a narrative/ideology while the fox thinks in terms of probabilities
- The hedgehog goes very deep in an area while the fox employs multiple different models
- The fox is a better forecaster than the hedgehog
- The fox is more tolerant of uncertainty
- More data does not yield better results and predictions
- Deciding the right kind of data from the abundance available
- To do prediction it is important to start from intuition and to keep model simple
- qualitative data should be weighted and considered
- Be self aware of your own biases
- Similarity scores – clustering in Netflix and baseball
- Be wary of confirmation biases
- Be wary of overfitting using small sample size – Tokyo earthquakes and global warming
- Correlation does not equal causation
- short hand heuristics to reduce the computational space – for example chess
- Irrational exuberance, Robert Shiller
- Expert political judgement, Philip E. Tetlock
- Future shock, Alvin and Heidi Toffler
- Principles of forecasting, J Scott Armstrong
- Predicting the unpredictable, Hough