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On Aug 1, 2012, a company named Knight Capital experienced a business-destroying incident. Much has been written about it, but that's not the topic of this thread.
In the aftermath, the amount of hindsight-bias-fueled-armchair-quarterbacking on this event knew no bounds. 1/n
In the aftermath, the amount of hindsight-bias-fueled-armchair-quarterbacking on this event knew no bounds. 1/n
From HN to blogs to Twitter, the finger pointing on what they "should have" done was rampant. This fervor culminated and was validated by the SEC's official report on the event, which was effectively a case study on what a post-incident review should *not* look like. 2/n
(kitchensoap.com/2013/10/29/cou…)
Among the finger-wagging (in the report and greater public reflection) was that they should have halted trade execution as soon as they knew something was amiss. 3/n
Among the finger-wagging (in the report and greater public reflection) was that they should have halted trade execution as soon as they knew something was amiss. 3/n
"reckless" "negligent" "naive" - these were the tomatoes lobbed at a group whose business went bankrupt in less than an hour.
Now, fast forward 3 years to July 9, 2015, at the New York Stock Exchange. 4/n
Now, fast forward 3 years to July 9, 2015, at the New York Stock Exchange. 4/n
Once they discovered a potentially significant bug in their systems, they made the decision that the peanut-gallery cried Knight Capital should have made: they halted their systems in abundance of caution.
The clone army of Captain Hindsights suited up, ready to go. 5/n
The clone army of Captain Hindsights suited up, ready to go. 5/n
My colleagues and others penned a submission to the @nytimes Op-ed section, reflecting our view that the NYSE's initiative to make a "sacrifice decision" like that was significant and something to be celebrated. 6/n
They chose not to run our piece and instead ran "The Bumbling and Irrelevant New York Stock Exchange" (nytimes.com/2015/07/09/opi…) which said (effectively) that the halting was unnecessary for a "plain-vanilla" glitch. 7/n
The point of this thread is to bring attention to the notion that our *reactions* to surprising events are the fuel that effectively dictates what we learn from them.
"You're moving too slow!" "You're moving too fast!" 8/n
"You're moving too slow!" "You're moving too fast!" 8/n
These admonishments come easily when you know the outcome.
When you don't, you do *what you think is necessary to balance multiple conflicting demands such as time pressure and being thorough and efficient at the same time. 9/n
When you don't, you do *what you think is necessary to balance multiple conflicting demands such as time pressure and being thorough and efficient at the same time. 9/n
How you characterize an event (or the absence of an event!) in hindsight and from the luxury of your distant view may help you feel comfortable with knowing the outcome, but it does nothing to understand or explain the world of those who experienced it at the time. 10/10
