I don't want to take the comments into a tangential dialog. And, I apologize to anyone who thought my original comment was inappropriate or offensive.

I thought it was appropriate to point out that, while the bias described in the post is real and common, we also see examples of the reverse of the problem (denying responsiblity for successes rather than failure). My point was to caution against overcompensating for the original bias as a strategy, rather than to merely be aware of the phenomenon and look for the best explanations for all outcomes.

And, it seems to me that taking a single example as in indication that I'm the sort of person who takes every opportunity to bash religion, says much more about the reader's biases than mine.

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1) I wonder if hindsight bias plays a role in the asymetric explanations. Ex post, events tend to be more obvious than they were ex ante. If I assume that I am smart, then if I get something right, it is probably because I saw or intuited the obvious outcome. If I got something wrong when it seems to have been obvious, it must have been because I was unlucky.

2) On your gambling optimists and pessimists point, if you are correct, that would suggest that gambling pessimists should have greater skewness preference than gambling optimists. Otherwise, why would a pessimist ever gamble?

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"Ray, that doesn't seem like an apt analogy or a joke. What's point are you trying to make?"

Inserting the "religious athlete" item in your post gives a nod to your own bias against religion in general. That is, just as the pervert sees perversion in every ink blot, you found an unlikely entry for religion in something having nothing to do with religion.

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It seems to me that the "lucky breaks/superior judgment" tendency explains a lot of gambling. If people who win on things that require some skill--blackjack, sports betting, poker, the stock market--attribute winning to their skills and losing to unlucky breaks, the activity gives them a lot of positive reinforcement. Things like roulette and lotteries don't fit with this: I wonder whether people who bet a lot on sports play the lottery, too.

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Ray, that doesn't seem like an apt analogy or a joke. What's point are you trying to make?

The closest joke I know ends with: "You're the one with the dirty pictures!"

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Very interesting as always.

People who tend to discount towards the self-congratulatory are probably incapable of objectively focusing on such factors as to why they did well on their predictions. The emotional need to be right is likely to always override most efforts at objective critique.

For the “objectively-challenged” who genuinely wanted to make such changes in their behavior, they could perhaps use a check list of sorts. It would have to be specific to the event or game, but a list covering some first principles relating to the very factors that they will probably be very aware of in case of a loss might be helpful in evaluating why they won.

That could be an experiment and possibly a business opportunity for someone. A little research at the water cooler discussing the losses of X amount of people; piecing the data together; and writing a “little black book” for evaluating whatever the event might be.

On investing, paying attention to bias is one of the most important factors. I was with Morgan Stanley for a bit, and then did quite a bit of currency trading on my own, and personal bias for a company or a nation’s currency was the surest way to lose money.

Conversely, understanding the cyclical nature of markets, one can also develop a kind of positive bias if that is the correct way to say it.

The crude market for example. Warmer weather brings higher oil prices, so anyone wishing to play the oil market would adopt a bullish bias on crude futures in the spring time. And so, when Iran runs off the rails as they’ve recently done, an investor would have already been “long” on crude or at least been at the ready to pull the trigger on a “long” or buying position.

Gil:Have you ever heard of the analogy or joke about the pervert taking the Rorschach test? Every ink blot was an image of perversion to him.

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One of the reasons I am so amenable to these kinds of strategies is because I have never made a successful investment. Every time my investments have made money it has been in spite of my mistakes rather than because of my reasoning.

The only "investment" which has made real money has been my house, but that wasn't really an investment, rather I didn't like having a landlord around snooping all the time when I was a renter.

A funny case happened just last week. I finally bought some oil, influenced by the Peak Oil drumbeat. Then a couple of days later Iran seized the British soldiers and in the ensuing crisis oil is up 10%. That was pretty lucky and not something I could take credit for at all.

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It seems like many religious athletes follow your advice.

You'll often hear a winner thanking God for helping him win, but rarely hear a loser blaming God for impeding him, or for helping his opponent.

This doesn't seem like a step towards understanding the truth of the matter to me. :-)

I realize that you meant to look for good explanations for winning.

I agree with Eliezer that this isn't a one-sided problem. It's just that the sides have different problems. People should strive to do better at explaining both successes and failures.

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Eliezer, yes I mean for folks to explain their wins in terms of factors other than their own ability or effort. But I think that since people usually explain their wins in terms of these, added effort into explaining wins would quickly move to other factors. Which is why people usually stop where they do, and which is why it would be good to dig deeper.

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Gamblers should only be pessimists if the gamble has a negative expected value.Pessimists are less likely to continue an activity with negative expected value, even if they are unable to calculate the approximate expected value.If a gamble has a positive expected value, optimists should have an edge.

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Robin, that sounds like the WRONG rule for handling this particular problem (which of course I agree is real). Maybe you meant to say that you should focus on explaining away your win, as the result of non-personal factors such as luck, or non-repeatable contextual factors such as good weather. And conversely, I would say, one should focus on explaining losses too, but explaining them in terms of personal and noncontextual factors which are subject to one's potential control; that is, accepting that it's your own fault; and moreover, that you ought to actually do something about it, such as leaving more error margin next time, or losing hope, or hiring someone else to do it instead, or reading an appropriate textbook, etc.

Every unexpected loss that takes place because of "bad luck" occurs because of your failure to anticipate bad luck, which is quite amazingly frequent in this world.

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Explain Your Wins

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