Newsletter Week 04 | 2022

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Hey there.I hope you've had a great week.

What I've made for you

Book Notes: The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas TalebThe book discusses a lot of biases and other errors on cognition. Survivor bias, confirmation bias, narrative fallacy, and so on.

Basically, big, rare, and inconceivable events happen. They happen more often than we think. We try to explain it in hindsight, but are frequently wrong. The people who can deal well with this uncertainty and unknowing can do very well. Those who are sure they know might do less well. We're prone to make stupid bets, and we should aim to make more rational bets. It's not that taking risks is bad, it's taking bad risks that is bad.

I believe it's important to be aware of the cognitive limitations we have as humans. Being aware of your limitations lets you know where you can push, and where you should question your judgment—and the judgment of others.Here's the TL;DR of the biases I mention above.

Survivorship bias

By focusing on those who overcame an obstacle, you are forgetting those who did not. Those who did not are usually not visible.

Confirmation bias

We are drawn to what makes us feel good, which is what confirms what we already believe we know.

The narrative fallacy

We tend to group complex mechanisms and oversimplify them to make sense of the world.

Bonus: Availability bias

We rely on the examples that immediately come to mind when evaluating some specific topic, concept, method, or decision.

And a quote from Charlie Munger...

Overcoming Mental Barriers

Roger Bannister is a very interesting man to think about. He was the first man to break the four-minute mile, previously thought of as impossible. After he did it, thousands followed. It's fascinating to think about how we as humans have these mental barriers that label something as impossible—until someone goes and does it.

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To your success. Regards, 

Christian Bager Bach Houmann