Sometimes we just need the right word to explain an idea which leads to action. Having a name for a thing changes the way we think about it. These are some of my favorites from the Wharton Moneyball podcast.
Let’s be precise. For instance, what does herd immunity mean? Often we are not precise.
What’s the effect size? There are a lot of things we could do, but which matter most?
Short the narrative. In sports there’s a narrative that drives the stories. Often the narrative is overpriced.
The most parsimonious explanation. I can never remember if it’s Hanlon’s or Occam’s razor. This and ‘short the narrative’ pair well together, like the blades of a scissors.
Mean reversion. Outcomes are combinations of skill and luck. Skill mostly persists, luck mostly does not, hence the Madden Curse. But(!!) skill isn’t static. If one player has a great year, the next year they might have a better year because while their luck component contracts, their skill share expands.
Coin flip. Statisticians (and artists) fall in love with their models. The coin flip is a Zeckhauser-esque simplification. How often will a team win three-straight games? One-eighth of the time.
Favorites or the field. We’ve covered this one. (Twice)
Tennis variance. Fewer events means more variance. Tennis events, like the Olympics, may have more upsets. This could also be part-of-the-reason there are more dominant men than women.
Update my priors. To change ones view with information. It’s being Bayesian.
Never-buyers (August 2022 addition). People unreachable through advertising. Example: Thomas Tull.
It was fiction that focused the idea of names.
5 thoughts on “Words from Wharton”
[…] is what we think about. Nowhere is this better than sports. We tend to overreact rather than “short the narrative” and base rates are a useful thinking tool to […]
[…] the brakes, host Cade Massey says, remind us of the base rates. That is, what’s the oldest that someone great tends to win […]
[…] Moneyball. Like quant investing, Moneyball is a way to use numbers to find patterns and to frame our thinking. […]
[…] always an inevitable team. It’s impossible they lose. Yet the better bettor ‘shorts the narrative‘. The Wharton Moneyball hosts regularly pillory “once in a generation talent” that […]
[…] Tull thought: How to persuade the middle group? Don’t waste money advertising to the huge fans or the never-buyers. […]