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free_agent's avatar

Contests for status are brutally important for those who are engaging in them. Some participants will be culled in each generation, and it's crucial not to be one of them.

"Consider the matter of status competition. Mr. Roberts, like so many before him, argues that conspicuous consumption is an unhappy zero-sum game. But this is of course true of most forms of competition: Most academics I know can rank-order everyone in the room at a professional conference with the speed and precision of a courtier at Versailles. Any competition, from looks to money to academic credentialing, both consumes a lot of resources and makes many of the participants feel bad about themselves. Why, then, does the literature on status competition always tell us that we should redistribute capital gains or inheritances and never tell us that we should redistribute academic chairs or book contracts?"-- Megan McArdle reviews "Shiny Objects" by James A. Roberts

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Overcoming Bias Commenter's avatar

"Warren Buffett is a recognized "prediction champion." "

How do we know that? Because he got rich? To distinguish between a game of chance and a game of skill you need to repeat the game many times. Major investment deals are too rare to repeat enough times during a human lifetime to get statistically significant results (it gets even worse when you realize many advisors are middle-aged at most). Resolutions of prediction markets will be equally rare.

"I'd say there is non-trivial evidence that Paul Ehrlich is poor at making predictions about natural resource shortages."

Keeping a record can point out idiots, but that does not prove it can point out champions. But really, how do we know Ehrlich wasn't right on a host of other subjects (they're just subjects that weren't so influential in history).

"Moreover, the entire point of a properly structured prediction market is that the "wisdom of crowds" tends to provide us with better information than would result from individual predictions,

Thus we have no need to fear, "policy based on this wishful championing starts leading to bad things." "

If we base decisions on the wisdom of the crowd we expose ourselves to market manipulation aimed at making us lean towards a certain side. If we base decisions on people who beat the market we might very well be listening to lucky idiots. Maybe we're better off getting used to the inherent fuzzyness of the social "sciences" and we should stop looking for crystal balls that do not exist, just like we don't take a meteorologist serious when he says he can predict the weather of august 18, 2050.

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