Kahneman Predicts
Interesting Kahneman presenation and Q&Avideo at CFA Institute event
Good bits
“Is the world in which the intuition comes up regular enough so that we have an opportunity to learn its rules?” Kahneman asked.
When it comes to the finance sector, the answer is probably no.
“It’s very difficult to imagine from the psychological analysis of what expertise is that you can develop true expertise in, say, predicting the stock market,” he said. “You cannot because the world isn’t sufficiently regular for people to learn rules.”
That doesn’t stop people from confidently predicting financial outcomes based on their experience.
“This is psychologically a puzzle,” Kahneman said. “How could one learn when there’s nothing to learn?”
That sort of intuition is really superstition. Which means we shouldn’t assume we have expertise in all the domains where we have intuitions. And we shouldn’t assume others do either.
“When somebody tells you that they have a strong hunch about a financial event,” he said, “the safe thing to do is not to believe them.”
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