33 05 August 2007 08:49PM

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Comment author: 11 May 2011 08:15:34PM 5 points [-]

The point of the article was that the subject really does anticipate different market outcomes to different extents, and that uncertainty can be represented using probability. Thus the 100 minutes of preparation time could be divided up usefully by spending n minutes on each justification, where n is reached by multiplying the probability of the outcome by 100 minutes.

For example, if you believe that the stock has a 60% chance of going up, a 35% chance of going down, and a 4.99% chance of staying the same, then you could spend 60 minutes preparing explanations of why it went up, 35 minutes preparing explanations of why it went down, 4.99 minutes preparing explanations of why it stayed the same, and .01 minutes fretting that you've forgotten one of the things that stocks can do.

You're probably right about the emotional state of pundits, but that wasn't really relevant to the point of the story.

this is my first post on these forums

Welcome to Less Wrong! It might be worth checking out Bayes' Theorem.

Comment author: 31 May 2012 05:12:04PM *  4 points [-]

This solution is the Kelly strategy. It isn't generally optimal, but this makes it optimal in this case:

if some particular outcome occurs, then your utility function is logarithmic in time spent preparing the excuse

Comment author: 31 May 2012 05:59:47PM 1 point [-]

Nice - I'm not sure if I've encountered that strategy before.