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There's a quick and easy way to test whether an activity involves skill: ask whether you can lose on purpose.
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Michael J. Mauboussin |
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Once an innovation reaches a certain level of popularity, its success is virtually assured. By the same token, great innovations can fail because the domino effect doesn't kick in.15
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Michael J. Mauboussin |
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When luck plays a part in determining the consequences of your actions, you don't want to study success to learn what strategy was used but rather study strategy to see whether it consistently led to success.
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Michael J. Mauboussin |
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In a probabilistic environment, you are better served by focusing on the process by which you make a decision than on the outcome
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Michael J. Mauboussin |
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To overcome inertia, Peter Drucker, the legendary consultant, suggested asking the seemingly naive question, "If we did not do this already, would we, knowing what we now know, go into it?"26"
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Michael J. Mauboussin |
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Not everything that matters can be measured, and not everything that can be measured matters.
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Michael J. Mauboussin |
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However, once you realize the answer to most questions is, "It depends," you are ready to embark on the quest to figure out what it depends on."
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Michael J. Mauboussin |
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Andrei Shleifer writes in his excellent book Inefficient Markets: An Introduction to Behavioral Finance:
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Michael J. Mauboussin |
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While most of us are comfortable acknowledging that luck plays a role in what we do, we have difficulty assessing its role after the fact. Once something has occurred and we can put together a story to explain it, it starts to seem like the outcome was predestined. Statistics don't appeal to our need to understand cause and effect, which is why they are so frequently ignored or misinterpreted. Stories, on the other hand, are a rich means to..
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probability
statistics
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Michael J. Mauboussin |