We have long posted decision-making links for trading. The following excerpts from “Subconsciously: Athletes May Play Like Statisticians”, by David Leonhardt of The New York Times continues that tradition:
When Justine Henin-Hardenne rips a cross-court forehand at the Australian Open or Tom Brady, the New England Patriots quarterback, dodges an onrushing defender, each looks like the very definition of living in the moment. Like other great athletes, they often appear to rely on speed, strength and lightning-fast reactions. There seems to be little time for highly advanced quantitative analysis that weighs current observations against past experiences to suggest a plan of attack. But this kind of analysis is precisely what the human brain does when facing a physical challenge, according to a study by two European scientists published in the current issue of Nature. The more uncertainty that people face – be it caused by wind on a tennis court, snow on a football field or darkness on a country highway – the more they make decisions based on their subconscious memory and the less they depend on what they see.
The great trend followers follow this path. It can be described, as “practice makes perfect”. However, people have long known about these concepts:
In everyday life, of course, people have been using the ideas underlying Bayesian analysis since well before it became the vogue in science labs, or even before Thomas Bayes, an 18th-century British minister and mathematician, formalized the method in a paper that was published two years after he died. When crossing a street, people rely on both what they see and what they remember about the speed of cars on similar roads. When deciding whether to take a sick child to a doctor, parents consider the current symptoms as well as the child’s history and their general knowledge of illness. “The human brain knows about Bayes’s rule,” said Konrad P. Körding, a postdoctoral researcher…
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