The standard response to that is "the market can stay irrational for longer than you can stay solvent."
also, in my case
What historical rate of return on investment = rich?
The standard response to that is "the market can stay irrational for longer than you can stay solvent."
It's a nice line but I think if being more 'rational' than the market causes you to lose all your money then you're doing 'rational' wrong. Rationality is supposed to be about winning, not about being 'right' but broke.
What historical rate of return on investment = rich?
Consistently displaying positive alpha over 5+ years would be indicative of some genuine investment skill. Some top hedge fund managers seem to be able to do this but it is a pretty rare level of talent.
I'm trying to better understand the relationship between incentivization and rationality, and it occurred to me that it is a "folk fact" around here that large financial incentives don't make cognitive biases go away.
However, I can't seem to find any papers that actually say this. It's not easy to google for (I have tried) so I wonder if the Less Wrong collective memory knows how to find the papers?
Is there a pattern to which biases go away with incentivization? Do we have at least 5 examples of biases that go away with incentivization and 5 examples that don't go away with incentivization?
As an incentive, I'll paypal $10 to the commenter whose answer is least biased and most useful.