Chat With Traders 121: Michael Mauboussin – Tactics for Better Decision Making, and Skill Versus Luck
10 snips
Apr 20, 2017 AI Snips
Chapters
Transcript
Episode notes
Process Over Outcome
- Familiarize yourself with cognitive biases to understand your limitations.
- Focus on the process of decision-making, not just the outcome, especially in probabilistic fields like trading.
Cognitive Biases
- Overconfidence makes people project overly narrow future outcomes.
- Confirmation bias leads to seeking information that confirms existing beliefs while dismissing contradictory evidence.
Combating Confirmation Bias
- Maintain an open mind and treat beliefs as hypotheses to be tested, not treasures.
- Use Bayes' theorem to update your views based on new information.