I am aware that there have been several discussions over to what extent x-rationality translates to actual improved outcomes, at least outside of certain very hard problems like metaethics. It seems to me that one of the best ways to translate epistemic rationality directly into actual utility is through financial investment/speculation, and so this would be a good subject for discussion (I assume it probably has been discussed before, but I’ve read most of this website and cannot remember any in depth-thread about this, except for the mention of markets being at least partially anti-inductive).
Partially the reason for my writing this is that I have been reading about neuroeconomics and doing some academic research of my own (as in actually running experiments), and I am shocked by how near-universal irrational behavior displayed is (and therefore, exploitable by more rational agents). Even professional traders behavior is swayed by things like fluctuating testosterone levels. (Not that I know how to compensate for this!)
On a related note I’ve also been thinking about:
1) Applications for machine learning/narrow AI to finance.
2) Economic irrationality invalidating the libertarian free-market ideas, and possibly libertarianism in general, seeing as personal decisions can often be conceptualized economically. (I should point out that libertarianism used to appeal to me, and I find this line of reasoning mildly disturbing)
3) Gender relations, and the possibility that men are on average better at maths then women has been discussed here, and so discussion of the possibility that women are generally better at finance (see link above) could be beneficial, both in the context of pointing out opportunities to female rationalists, and to help dispel any appearance of misogyny that this community may have.
Again, I can’t remember these being discussed here, and (1) seems very relevant to this community, although (2) is probably mind-killing and not very productive, unless any of us actually have the power to influence politics.
Apologies if this all has been already discussed in-depth somewhere.
Even professional traders behavior is swayed by things like fluctuating testosterone levels. (Not that I know how to compensate for this!)
Bring some women to the team. (Yeah, that just changes the problem to a harder one: Where to find enough women rationalists interested in finance?) Or have multiple men on the team, and let them decide through some kind of voting. This would work only if their testosterone level fluctuations are uncorrelated. You could do some things to prevent that, e.g. forbid them to meet in person, and make their coordination as impersonal as possible, to prevent them from making each other angry.
This sounds like a huge complication to compensate for a single source of bias, so it needs some measurement. If this could help the team make millions, perhaps it is worth doing.
Economic irrationality invalidating the libertarian free-market ideas
Maybe irrationality could be modelled as just another cost of participating in the market. There are many kinds of costs which one has to pay to participate in the market. You pay for advertising, for transferring goods from the place they are produced to the customer, etc. Your own body must be fed and clothed. Irrationality is a cost of using your brain.
If you would transfer your cargo by a ship, especially a few centuries ago, you would have to accept that some part of your ships will sink. And yet, you could make a profit, on average. Similarly, if you use human brain to plan your business, you have to accept that some part of your plans will fail. The profit can still be possible, on average.
This is just from memory, but I think testosterone levels aren’t (just?) about anger. Again from memory, testosterone goes up from winning, so the problem is overconfidence from previous victories.
Bring some women to the team. (Yeah, that just changes the problem to a harder one: Where to find enough women rationalists interested in finance?)
I’m afraid that is opposite to a solution to this particular problem. Even neglecting the fluctuation in women’s testosterone levels and considering only the stereotypical androgenic behaviour of the males this can be expected to (if anything) increase the risk taking behaviours of the kind warned against here. Adding females to an already aggressive male group gives them prospective mates to show off to. The linked to article mentions observations of this.
(There may be other reasons to bring more women onto your professional trading team. Just not this one.)
I am aware that there have been several discussions over to what extent x-rationality translates to actual improved outcomes, at least outside of certain very hard problems like metaethics. It seems to me that one of the best ways to translate epistemic rationality directly into actual utility is through financial investment/speculation, and so this would be a good subject for discussion (I assume it probably has been discussed before, but I’ve read most of this website and cannot remember any in depth-thread about this, except for the mention of markets being at least partially anti-inductive).
Partially the reason for my writing this is that I have been reading about neuroeconomics and doing some academic research of my own (as in actually running experiments), and I am shocked by how near-universal irrational behavior displayed is (and therefore, exploitable by more rational agents). Even professional traders behavior is swayed by things like fluctuating testosterone levels. (Not that I know how to compensate for this!)
On a related note I’ve also been thinking about:
1) Applications for machine learning/narrow AI to finance.
2) Economic irrationality invalidating the libertarian free-market ideas, and possibly libertarianism in general, seeing as personal decisions can often be conceptualized economically. (I should point out that libertarianism used to appeal to me, and I find this line of reasoning mildly disturbing)
3) Gender relations, and the possibility that men are on average better at maths then women has been discussed here, and so discussion of the possibility that women are generally better at finance (see link above) could be beneficial, both in the context of pointing out opportunities to female rationalists, and to help dispel any appearance of misogyny that this community may have.
Again, I can’t remember these being discussed here, and (1) seems very relevant to this community, although (2) is probably mind-killing and not very productive, unless any of us actually have the power to influence politics.
Apologies if this all has been already discussed in-depth somewhere.
Bring some women to the team. (Yeah, that just changes the problem to a harder one: Where to find enough women rationalists interested in finance?) Or have multiple men on the team, and let them decide through some kind of voting. This would work only if their testosterone level fluctuations are uncorrelated. You could do some things to prevent that, e.g. forbid them to meet in person, and make their coordination as impersonal as possible, to prevent them from making each other angry.
This sounds like a huge complication to compensate for a single source of bias, so it needs some measurement. If this could help the team make millions, perhaps it is worth doing.
Maybe irrationality could be modelled as just another cost of participating in the market. There are many kinds of costs which one has to pay to participate in the market. You pay for advertising, for transferring goods from the place they are produced to the customer, etc. Your own body must be fed and clothed. Irrationality is a cost of using your brain.
If you would transfer your cargo by a ship, especially a few centuries ago, you would have to accept that some part of your ships will sink. And yet, you could make a profit, on average. Similarly, if you use human brain to plan your business, you have to accept that some part of your plans will fail. The profit can still be possible, on average.
This is just from memory, but I think testosterone levels aren’t (just?) about anger. Again from memory, testosterone goes up from winning, so the problem is overconfidence from previous victories.
Yes; http://lesswrong.com/lw/84i/social_status_testosterone/
I’m afraid that is opposite to a solution to this particular problem. Even neglecting the fluctuation in women’s testosterone levels and considering only the stereotypical androgenic behaviour of the males this can be expected to (if anything) increase the risk taking behaviours of the kind warned against here. Adding females to an already aggressive male group gives them prospective mates to show off to. The linked to article mentions observations of this.
(There may be other reasons to bring more women onto your professional trading team. Just not this one.)