A quarantine activity in my sister-in-law’s family is buying stocks. Stonks. Gamestonks? Each week, each kid, gets five dollars. They invest in whatever they want.
The best returns, to date, are from my niece. She’s 8. Her name begins with ‘T’ so her stock choices begin with ‘T’. She owns Tesla.
My three nieces and nephews aren’t competing but they do demonstrate that in small groups the best way to outperform others is ‘be chalky.’ Picking favorites is called chalky because in the days of horse racing, tracks wrote the lines on chalkboards with chalk. Even then, people liked betting favorites, so those odds were updated more often and had fresher chalk marks. Hence, ‘betting chalk’.
The same structure works for winning in any small group. To outperform, bet chalk. **However in a large group, choose variance.** Be different, and be right. We know that something will happen. We just don’t know which something.
One way to think through this approach is to consider the sum of the NCAAM final four team’s ranks. This question was posed on Wharton Moneyball and we have an answer: 11. On average, two number one seeds make it to the final four each year. Only in 1993 did all one seeds make it to the FF.
Yeah, but Covid!
That’s what I thought too. When Cade Massey proposed that it might be a more variable season I thought, base rates be dammed it’s going over. But that’s probably wrong (Narrator: It was not).
What I missed what something Daniel Kahneman wrote about in TFaS: substitution.
Rather than answer the question: Will the sum of the ranks of the final four teams be larger than average this year? I substituted the question: Will there be more variance this year?
What I missed was the idea behind hurdle technologies. In food preservation there’s not just one way that keeps food safe to eat, but a bunch. Food might be too acidic and be cooled and be sealed. It’s the combination of things, a series of obstacles, which limits bacteria.
That same idea applies in a bracket. Oral Roberts (#15) beat Ohio State (#2) and Florida (#7) but had to face Arkansas (#3) too, who won.
Ultimately the final four seeds totaled 15 (1,1,2,11). My direction was right. My reasoning was wrong.