, 5 tweets, 3 min read Read on Twitter
Today #RWRI 10, we discuss:
How the "calibration" ranking by BS Vendor @juliagalef is not even wrong

1) In real life, you shb be calibrated in payoff space, not in frequency space. Someone right 80% abt Russian Roulette won't survive, option traders can be right ~1%
#ergodicity
2) Which is the idea of #skininthegame as a filter. The ONLY filter.

Verbal predictions do not map to anything real, as they penalize those wrong most of the time in skewed payoffs and favor bureaucrats who optimize in frequency space.

Survival=calibration.
Lookup the story In Fooled by Randomness about the trader who thinks the market is "more likely to go up", yet is very heavily short.
The key is that estimation errors for probabilities are ALWAYS thin- tailed even for Fat-tailed variables. Those for expectation will be fat tailed for fat tailed variables.

Which is why @juliagalef rankings of “experts” is an insult to both probability and the real world.
My book puts some rigor behind the horrible @juliagalef flaw in rankings of “experts” based on "calibration" & thinking that one can get expectation error VIA probability error.

Aside from the fact that, to add insult to injury, she put me in the sale list as @SamHarrisOrg .
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