In 'Full House', Stephen Jay Gould explores how misconceptions about statistics can lead to misunderstandings of trends in complex systems. He uses baseball and evolutionary biology to illustrate how focusing on averages or extreme values can distort our view of reality. Gould argues that evolution does not inherently drive towards complexity, but rather, complexity is one end of a distribution where most life remains simple, like bacteria.
Scorecasting explores the hidden forces that shape sports outcomes, challenging common beliefs such as home-field advantage, the myth of momentum, and the axiom that defense wins championships. The authors use behavioral economics and statistical analysis to provide insights into these phenomena across various sports. Their findings often contradict popular narratives, offering a fresh perspective on how sports are played and won.
The Rationality Quotient presents a significant advance in the psychology of rationality by developing the Comprehensive Assessment of Rational Thinking (CART) test. This book challenges traditional intelligence tests by providing a measure of rationality that is complementary to IQ. It explores various components of rational thought, including probabilistic reasoning and scientific reasoning, and discusses the implications of such a test for understanding cognitive abilities.
In 'Adaptive Markets: Financial Evolution at the Speed of Thought', Andrew W. Lo presents a new paradigm that combines rationality and irrationality in financial markets. Drawing on psychology, evolutionary biology, neuroscience, and artificial intelligence, Lo explains how financial markets evolve and adapt, often leading to inefficiencies that can be exploited. The book offers insights into managing risk, understanding financial crises, and formulating policies for financial stability.
The novel centers on two Chinese American siblings on the lam after their sometimes abusive father dies, leaving them to survive in a dreamscape that blends historical and mythological elements. The story is narrated by a sister whose gender is more fluid and includes elements of ghost narratives, gold, and tigers. Zhang's work challenges the traditional white-centered narratives of the American West, incorporating elements of her own cultural background and childhood experiences.
In *Being Mortal*, Atul Gawande explores the limitations and failures of modern medicine in dealing with aging and death. Through personal stories, case studies, and research, Gawande argues that the medical profession often prioritizes prolonging life over improving its quality. He highlights the need for greater communication and planning around end-of-life care, emphasizing the importance of autonomy, dignity, and individual preferences. The book encourages readers to rethink their approach to aging and dying, focusing on what makes life meaningful and fulfilling until the very end.
In 'The End of Theory', Richard Bookstaber argues that standard economic models are inadequate for dealing with financial crises due to their failure to account for human complexities and radical uncertainty. He advocates for an alternative approach using agent-based economics, which recognizes the heuristic interactions of humans in complex environments. This approach aims to provide a more realistic framework for preventing and managing financial crises.
Big Data Baseball explores the Pittsburgh Pirates' use of advanced analytics to break their 20-year losing streak in 2013. The book delves into how the team leveraged data to implement strategies like defensive shifts and pitch framing, leading to their first winning season in two decades. It offers an accessible look at sabermetrics and its impact on baseball.
Michael Mauboussin currently is the Director of Research at BlueMountain Capital, a multi-billion dollar hedge fund and asset manager. He spent the majority of his professional career thinking and writing about decision making, behavior and complex systems, with long stints at Credit Suisse and nearly a decade alongside Bill Miller at Legg Mason. Michael has been an Adjust Professor at Columbia Business School for 24 years.
Our conversation covers Michael’s early career, the paradox of skill, academic research more favorable to active management, decision-making, optimal size and composition of teams, unsettling features in the market, data analysis in sports, career risk, the Santa Fe Institute, and Michael’s new research on the horizon.
Every time I speak to Michael I come away thinking better and feeling smarter, and this time was no exception.
Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership
Capital Allocators – Inside the Institutional Investment Industry 
