Sunday, July 18, 2010
Sadly and eerily true I think
This article, posted by a friend on Facebook (insert shame of facebook use here) really pointed out a lot of what I've been observing and thinking about both for myself and for others. I haven't checked the sources yet (I'm curious about the design of the experiments he discusses - in my own experience even well-meaning reporters can flub thins up when they try to report results of studies) but the basic ideas and observations seem right on, and very discouraging.
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Nassim Taleb in his book THE BLACK SWAN; The Impact of the HIghly Improbable. Talks about this same premise.
Lesson No. 3: Beware of fire hydrants
Taleb's claim that too much news -- especially financial news -- is not only bad for you, but can actually be toxic.
To make his point, Taleb shared the story of a widely publicized study in which a large number of people were provided with fuzzy pictures of a fire hydrant. Counter-intuitively, the people who were given more pictures (each of which became progressively clearer) performed worse at guessing what the object was than those who were given fewer pictures.
One reason this occurred is because the people who were given more information often formed a wrong opinion of what the object was early on, and then clung to that idea tenaciously, even in the face of new and better evidence.
One takeaway from this analogy is that people often treat financial news in a similar manner. Rather than accept the new information at face value, people instead select portions of the news to support what they think they already know.
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