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tygorton comments on Irrational hardware vs. rational software - Less Wrong
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But is being an effective human all that "rational".
When I look at humans who are hugely successful, I do not see rationality as their guiding principal.
Do you see some other principle that is regularly the guiding principle of hugely successful people, and is not regularly the guiding principle of not hugely successful people?
(If you do, please share! I'd like to be hugely successful, so it would be rational for me to adopt that principle if it existed.)
The book "How to Win Friends and Influence People" is sort of the go-to text here. The upshot is that the guiding principle is twofold: helping people and requesting help from people. If you wish to maximize your own wealth and power, apply this principle especially to the rich and powerful.
Why the dichotomy? A principle can be used by different people with different abilities, leading to different levels of success, but still remain fundamentally flawed, leading to suboptimal achievement for both gifted and non-gifted people.
Short term benefits vs long term benefits..
If a test regularly returns 'you have cancer' when I have cancer, and regularly returns 'you have cancer' when I don't have cancer, it's not a good test.
Similarly, if a principles guides people to be successful, and it guides people to be unsuccessful, it is not a good principle.
For example: it could be said that "eat food at least daily, drink water at least daily, and sleep daily or close to it" is a principle that hugely successful people follow. It is also a principle that not hugely successful people follow. Following this principle will not make me hugely successful.
I could just say "Pr(not successful | follows principle) needs to be low, otherwise base rate makes it meaningless".
If everybody had to choose between investing his savings in the lottery, or in index funds, then if you look at the very rich most of them will be lottery players, even though it was the worst choice.
Can you evidence that?
I don't have real world stats, but here's a hypothetical scenario. Say there's a world where there's two options for making money: a lottery with a .0001 percent (1 in 1,000,000) chance of making a billion dollars (EV $1000), or an investment with a 100 percent chance of making a million dollars. The rational thing to do is invest, but the richest people will have bought lottery tickets. So will a great many broke people, but you won't see them on the news.
careful with your utility function. You need utility to be linear over money to do expected value.
If your goal is to be a billionaire, the ev of the lottery is 1e-6 and the ev of the solid investment is 0. (assigning utility 1 to state of being billionaire and 0 otherwise)
What is "Can you evidence that?" supposed to mean? Especially when talking about a hypothetical scenario ...
Could you please make an effort to communicate clear questions?
(If you're asking for clarification, then Normal_Anomaly's explanation is what I meant)
Ah, I misread your comment, my apologies. I'll retract my question.
For what it's worth, I had stealthily edited my question - ("If everybody had" instead of "If everybody has"); I was trying to find a short illustration of the fact that a choice with a low expected value but a high variance will be overrepresented among those who got the highest value. It seems like I failed at being concise and clear :P
Heh, well I've got dyslexia so every now and then I'll end up reading things as different to what they actually say. It's more my dyslexia than your wording. XD
Hmm, I wonder if being concise is all it's cracked up to be. Concise messages usually have lower information content, so they're actually less useful for narrowing down an idea's location in idea-space. Thanks, I'm looking into effective communication at the moment and probably wouldn't have realized the downside to being concise if you hadn't said that.