From The Drunkard’s Walk by Leonard Mlodinow

Over the past few weeks, I’ve gone into a deep dive on the topics of decision-making, chance and uncertainty, and what the inevitable rise of AI means for all this.

What’s for certain: we are terrible at understanding the role that chance and uncertainty play in our lives and the world at large. (My favorite illustration of this irrationality are the test subjects who actually rated themselves above average at predicting the outcome of coin tosses.)

However, the tools we’ve developed to bring some measure of understanding to these domains have proved enormously powerful.

What seems inevitable: over the long-run, humans will choose to both modify our cognitive abilities (through genetic manipulation and “smart” drugs — what I’d like to call “ingestibles”), and put greater reliance on the decision-making power of data and AI.

E.O. Wilson takes the latter point as given, but believes we will remain distinctly “human” despite it all:

After we have made all of the cultural knowledge available with only a few keystrokes, and after we have built robots that can outthink and outperform us, both of which initiatives are already well under way, what will be left to humanity? There is only one answer: we will choose to retain the uniquely messy, self-contradictory, internally conflicted, endlessly creative human mind that exists today.

It’s true that, given the pace of evolutionary change, the essential nature of our caveman brains will persist for many more years. But the club that caveman holds will be much, much more powerful.

Coming down from the pure air of mathematics and science, from noble thoughts about the future of mankind, we come to the world of finance. The same topics of decision-making and uncertainty with all the fun of money, power and ego thrown in.

Fooled by Randomness (overview of Nassim Taleb’s book on Farnam Street) “It is as if there were two planets: the one in which we actually live and the one, considerably more deterministic, on which people are convinced we live. It is as simple as that: Past events will always look less random than they were (it is called the hindsight bias).”

A Dozen Things I’ve Learned from Nassim Taleb about Optionality/Investing “If you ‘have optionality,’ you don’t have much need for what is commonly called intelligence, knowledge, insight, skills, and these complicated things that take place in our brain cells. For you don’t have to be right that often.”

This Simple Way Is the Best Way to Predict the Market “Mr. Bogle… found that you can explain the past returns on stocks — and predict their future returns with decent accuracy — by taking only three factors into account. At first, that sounds so childishly simple it has to be wrong. But researchers in many fields have found that extremely basic formulas are often superior at making predictions about complicated systems.”

Vanguard’s Gain Is Wall Street’s Pain as Billions Leave the Financial Industry “At this rate, Vanguard will be removing $40 billion in revenue each year from the financial industry by 2020, equivalent to a 20 percent hit to revenue based on today’s numbers.”

After posting a few thoughts on Twitter about software through the lens of biology and evolution, I found this very nice essay from Kevin Simler which explores similar territory.

A Codebase is an Organism “Here’s what no one tells you when you graduate with a degree in computer science and take up a job in software engineering: The computer is a machine, but a codebase is an organism.”

And here’s the best of the rest of what I found this week:

Helsinki Bus Station Theory “‘This goes on all your creative life: always showing new work, always being compared to others.’” What’s the answer? ‘It’s simple. Stay on the bus. Stay on the fucking bus.’”

50 Reasons Why We Can’t Change “We’ve never done it before. Nobody else has ever done it. It has never been tried before. We tried it before. Another company/person tried it before.”

Against all odds, print books are on the rise again in the US “The same can’t be said of the e-book, which is seeing a decline in popularity.”