I suspect there's a Pons Asinorum of probability between the bettor who thinks that you make money on horse races by betting on the horse you think will win, and the bettor who realizes that you can only make money on horse races if you find horses whose odds seem poorly calibrated relative to superior probabilistic guesses.

There is, I think, a second Pons Asinorum associated with more advanced finance, and it is the concept that markets are an anti-inductive environment.

Let's say you see me flipping a coin.  It is not necessarily a fair coin.  It's a biased coin, and you don't know the bias.  I flip the coin nine times, and the coin comes up "heads" each time.  I flip the coin a tenth time.  What is the probability that it comes up heads?

If you answered "ten-elevenths, by Laplace's Rule of Succession", you are a fine scientist in ordinary environments, but you will lose money in finance.

In finance the correct reply is, "Well... if everyone else also saw the coin coming up heads... then by now the odds are probably back to fifty-fifty."

Recently on Hacker News I saw a commenter insisting that stock prices had nowhere to go but down, because the economy was in such awful shape.  If stock prices have nowhere to go but down, and everyone knows it, then trades won't clear - remember, for every seller there must be a buyer - until prices have gone down far enough that there is once again a possibility of prices going up.

So you can see the bizarreness of someone saying, "Real estate prices have gone up by 10% a year for the last N years, and we've never seen a drop."  This treats the market like it was the mass of an electron or something.  Markets are anti-inductive.  If, historically, real estate prices have always gone up, they will keep rising until they can go down.

To break up the awkward silence at the start of a recent Overcoming Bias meetup, I asked everyone present to tell their rationalist origin story - a key event or fact that played a role in their first beginning to aspire to rationality.  This worked surprisingly well (and I would recommend it for future meetups).

I think I've already told enough of my own origin story on Overcoming Bias: how I was digging in my parents' yard as a kid and found a tarnished silver amulet inscribed with Bayes's Theorem, and how I wore it to bed that night and dreamed of a woman in white, holding an ancient leather-bound book called Judgment Under Uncertainty: Heuristics and Biases (eds. D. Kahneman, P. Slovic, and A. Tversky, 1982)... but there's no need to go into that again.

So, seriously... how did you originally go down that road?

Added:  For some odd reason, many of the commenters here seem to have had a single experience in common - namely, at some point, encountering Overcoming Bias...  But I'm especially interested in what it takes to get the transition started - crossing the first divide.  This would be very valuable knowledge if it can be generalized.  If that did happen at OB, please try to specify what was the crucial "Aha!" insight (down to the specific post if possible).

Followup to:  Against Maturity

"Rule of thumb:  Be skeptical of things you learned before you could read.  E.g., religion."
        -- Ben Casnocha

Looking down on others is fun, and if there's one group we adults can all enjoy looking down on, it's children.  At least I assume this is one of the driving forces behind the incredible disregard for... but don't get me started.

Inconveniently, though, most of us were children at one point or another during our lives.  Furthermore, many of us, as adults, still believe or choose certain things that we happened to believe or choose as children.  This fact is incongruent with the general fun of condescension - it means that your life is being run by a child, even if that particular child happens to be your own past self.

I suspect that most of us therefore underestimate the degree to which our youths were formative - because to admit that your youth was formative is to admit that the course of your life was not all steered by Incredibly Deep Wisdom and uncaused free will.

To give a concrete example, suppose you asked me, "Eliezer, where does your altruism originally come from?  What was the very first step in the chain that made you amenable to helping others?"

Then my best guess would be "Watching He-Man and similar TV shows as a very young and impressionable child, then failing to compartmentalize the way my contemporaries did."  (Same reason my Jewish education didn't take; I either genuinely believed something, or didn't believe it at all.  (Not that I'm saying that I believed He-Man was fact; just that the altruistic behavior I picked up wasn't compartmentalized off into some safely harmless area of my brain, then or later.))

It's my understanding that most people would be reluctant to admit this sort of historical fact, because it makes them sound childish - in the sense that they're still being governed by the causal history of a child.

But I find myself skeptical that others are governed by their childhood causal histories so much less than myself - especially when there's a simple alternative explanation: they're too embarrassed to admit it.