Someone tosses a coin ten times; it comes up heads every time. What's the probability it comes up heads on the next toss? (Pretty darn high—part of @nntaleb's work is unprogramming you from your high-school rules of thumb.) Now consider the (related) Gambler's fallacy...

In this case, it's a theory about compensation: the worse one's luck is, the more likely it is to see a reversal. On the surface, it's irrational. The more bad luck you have, the more you accumulate evidence that the system is rigged.
But there's also an anthropic component. If the luck is bad enough, it starts to become inconsistent with your survival. You've accumulated evidence for correlations in the environment, but these correlations (may be) inconsistent with (people like you) being in this environment.
An example. You're in a city where everyone takes public transport. You encounter a string of bad delays. It's reasonable to conclude they'll end—otherwise people wouldn't take public transport. It's unlikely that you happened to show up right when the network collapses.
Of course, that's a bad heuristic in a casino, which relies on a constant influx of losers. But in other environments, particularly with persistent populations and no evidence for sudden changes in the underlying laws, it makes sense.
Another example: the three-card monte scam in a big city. You meet some guys on the corner, who convince you to go in on the game. You win, a few times. The more you win, the more you ought to be convinced that your luck will turn. Otherwise, how are these guys there?
(In this case, the anthropic reasoning concerns the scamsters—it's unlikely that you showed up right when their operation starts to fall apart.)
The general principle, which again is due to @nntaleb, is a new kind of failure. The "IYI", intellectual-yet-idiot. IMO, this is driven by standardized testing—we started to promote people on the basis of their ability to internalize fake-but-difficult-to-master rules...
In a previous cycle, the British ran their empire by fast-tracking twelve year olds who could master Latin grammar. The ambiguities of interpretation make this a much better idea than the SAT version, where one learns more abstract "grammars"—e.g., integration by parts.
Everything can be degraded, of course. When I give CMU students the coin-toss problem, it's usually unfamiliar enough that they're thrown back on a more complex, and life-integrated, form of reasoning. But ask that question enough, and tutors will arise to teach the solution...
...which negates the original value of the puzzle. (BTW, nearly all the students "get it", which bodes well for our future engineers.)
A final thought on this, before I get back to my real work. If you pose this kind of problem as a teacher, there's a second level to what's going on: your students are also modeling you! (and your class.)
i.e., they're asking themselves—is this a class where we're all living in la-la land, or is there some substance here, some connection to our own lived experience?
So, yes, I'm proud that most of my students get it. :)
This is lovely—yes! "I can't be the only idiot" summarizes why we keep waiting for the train with rising hope.
You might also connect it to the bulk-vs-long-tail. "I'm not the only idiot" is true when there are repeated tests of the system of similar magnitude.
OK, truly one last thought. A scam is more likely to succeed if you're doing something new, but can convince people you've always been around, that this is "normal". Certainly psychologically obvious, but it's fun to look at it from the point of view of rational analysis.
(In the case where the scam operates by inducing the Concorde/sunk-cost fallacy—slowly extracting money from the person, who continues to believe in a final payoff.)

More from Simon DeDeo

This is a pretty valiant attempt to defend the "Feminist Glaciology" article, which says conventional wisdom is wrong, and this is a solid piece of scholarship. I'll beg to differ, because I think Jeffery, here, is confusing scholarship with "saying things that seem right".

The article is, at heart, deeply weird, even essentialist. Here, for example, is the claim that proposing climate engineering is a "man" thing. Also a "man" thing: attempting to get distance from a topic, approaching it in a disinterested fashion.

Also a "man" thing—physical courage. (I guess, not quite: physical courage "co-constitutes" masculinist glaciology along with nationalism and colonialism.)

There's criticism of a New York Times article that talks about glaciology adventures, which makes a similar point.

At the heart of this chunk is the claim that glaciology excludes women because of a narrative of scientific objectivity and physical adventure. This is a strong claim! It's not enough to say, hey, sure, sounds good. Is it true?

More from Crypto

1/ Welcome to #DeFi Wednesday.

Let's talk about how interest-bearing cash on a blockchain is going to revolutionise boring corporate treasury management that concerns every company is is a larger business than all crypto trading in the world.

Enter the thread


2/ Blockchain community is often seen as toxic maxis and redditors who shill other their weekly favourite shitcoin in the hope of getting Lambo.

Sometimes we also do things that progress humanity towards the better future and interest-bearing cash is one of those things.

3/ Less chad and more things that actually matter:

My incomplete theory of interest-bearing cash is also available also as a blog post:

It is 15 pages. Pick your slow poison or die fast by continue reading here.

4/ First time in the history we have an ability to create interest-bearing cash-like instruments.

Interest-bearing cash ticks up dollar (euro) balance real-time in your wallet.

Here is a demonstration using @aaveaave aDAI, based on @makerdao DAI, and @TrustWalletApp

5/ Interest-bearing cash is not like your bank's saving account. Your money in a bank is not yours, but bank's. There are some flaws in the current banking system causing a headache for Chief Financial Officers (CFOs)

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Remember, this money is just fun. If you launched a product (or even attempted a launch) - you did something worth MUCH more than $1,000.


The winners 👇


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@frantzfries built a platform where you can see how skipping your morning latte could do for the world.

A great product for a great cause.

Congrats Chris on winning $250!


Instaland - Create amazing landing pages for your followers.

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Really impressive for 24 hours. Congrats!


SayHenlo - Chat without distractions

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Dalton is a beast. I'm so excited he placed in the top 10.


CoderStory - Learn to code from developers across the globe!

Built by @jesswallaceuk, the project is focused on highlighting the experience of developers and people learning to code.

I wish this existed when I learned to code! Congrats on $250!!
So the cryptocurrency industry has basically two products, one which is relatively benign and doesn't have product market fit, and one which is malignant and does. The industry has a weird superposition of understanding this fact and (strategically?) not understanding it.

The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.

This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.

The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."

This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.