I still did not finish Kahneman's book (*), but I would like to share just this one thought about it:
He references a lot of interesting experimental results, I guess on the order of a hundred.
If each result is flawed with e.g. a probability of 1% , it would mean that there is likely at least one misleading result (with probability approximately 64%) in the book.
I think Kahneman would actually appreciate this kind of skeptical slow system 2 thinking.
And indeed we already know one such faulty result. It is especially embarrassing that he describes the Florida effect as "an instant classic" and writes "the results are not made up, nor are they statistical flukes".
I think the study claiming that stocks with simple ticker symbols show better performance should be re-examined too...
(*) It is the kind of book where I take lots of notes and double check things. But I am also lazy.
1 comment:
As you get further into the book I think it's likely that you might, in some cases, also have a reservation or two of the appropriateness or practicality of applying Bayes's theorem in our thinking. I'm not knocking the book as a whole, because I thought it was really quite a good book, but there were certain things that bothered me a little.
Mostly though I'm interested in knowing your opinion of the types of cases in which prospect theory significantly improves the predictive power of economic models. That is in the last part of the book so I will have to wait.
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