

The Psychology of Why Prediction Can Be So Hard
339 snips Mar 14, 2025
Prediction is trickier than we think, influenced by historical events and our own biases. Cultural backgrounds shape our emotional responses, complicating economic forecasts. Desperation can lead to misplaced faith in financial quick fixes during crises. The sunk cost fallacy looms large, often clouding judgment in decision-making. With fascinating examples from history and personal insights, this discussion uncovers the psychological dance of belief, hope, and the unpredictability of the future.
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The Irony of Prediction
- History is a study of surprising events, often outliers.
- Ironically, we use this historical data, which is full of unprecedented events, to predict the future.
Nile's High-Water Mark
- Nassim Taleb's example of Egyptian scribes tracking Nile flood levels illustrates this.
- They used historical highs to predict future worst-case scenarios, neglecting that past extremes were unprecedented.
Imagination over Analysis
- Relying solely on past data is not a failure of analysis but a failure of imagination.
- The future can differ vastly from the past.