Human Behaviour, Decisions, and Predictions

Prediction and Psychology -Dan Gilbert

The most interesting bit of information I found was this idea of the future being all there is to care about. Because the past can't be changed and the present is an infinitesimally small moment, that leaves us constantly thinking about the future. Whether that future is in 10 minutes or 10 years, it's constantly on our minds. As Dan Gilbert mentions, we consistently think about the future because it brings us joy and allows us to dream up possible scenarios. I think this brings up a tough tradeoff because we enjoy thinking about the future but we also need to live and act in the present. Without our actions in the present, we can't truly be happy or achieve anything we dream possible about the future. Overall, I think the ability to manage this tradeoff between the future and the present is key to living a good life. https://www.labxchange.org/library/pathway/lx-pathway:53ffe9d1-bc3b-4730-abb3-d95f5ab5f954/items/lx-pb:53ffe9d1-bc3b-4730-abb3-d95f5ab5f954:lx_simulation:5e3f229f?source=%2Flibrary%2Fclusters%2Flx-cluster%3AModernPrediction

An unanswered question that I would've asked is first of all how can we better predict long-tail outcomes?? and also how can we better account for them in our modeling? As David Laibson mentioned, these long-tail outcomes are very unlikely but have massive impacts whether that's good or bad. Despite these massive outcomes, it seems that humans and our modern prediction systems focus more on the normal distribution of possible outcomes and in some cases, we've even begun to expect them (stock market returning ~8% per year). These assumptions and models become very dangerous over long periods of time due to the inevitability of long-tail events. Overall, I think if we can better account for these long-tail events, we can dramatically improve our models and predictions. https://www.labxchange.org/library/pathway/lx-pathway:b5121779-9f49-49db-93d9-80d5d67dadb3/items/lx-pb:b5121779-9f49-49db-93d9-80d5d67dadb3:lx_simulation:f10b9110?source=%2Flibrary%2Fclusters%2Flx-cluster%3AModernPrediction