Harry Potter and the Methods of Rationality 4 & 5 – The Efficient Market Hypothesis & The Fundamental Attribution Error
Apr 27, 2011
Harry discovers he’s rich, meets Draco Malfoy and estimates his fortune. Harry persuades McGonagall to buy supplies for Hogwarts. Harry questions his identity and conspiracy theories. Harry and McGonagall discuss the fundamental attribution error. Harry and Draco have a flirtatious encounter interrupted by Lucius Malfoy. Draco expresses desire to be sorted into Gryffindor.
AI Snips
Chapters
Transcript
Episode notes
Wizarding Economy's Financial System
- The wizarding economy has a crude financial system with coins made of pure metals and fees on coining.
- It lacks arbitrage mechanisms familiar in the Muggle economy, making it inefficient by modern standards.
Harry’s Wealth Estimation Insight
- Harry uses a Fermi calculation to estimate his vault's worth at around two million pounds sterling.
- Being rich is far less interesting to Harry than discovering magic itself.
Harry’s Coin Transfer Cunning
- Harry discreetly transfers extra gold galleons into a mokeskin pouch to avoid detection.
- This self-theft highlights his resourcefulness in handling wizarding wealth.