Subjective Degrees Of Confidence
Betting market prices are subject to random perturbations prior to the commencement of the event; a concurrence of all sorts of factors, not least, the fact that nobody is ever trading under the same informational (and/or psychological)conditions. There is massive varience in terms of how people choose to interpret and integrate so-called new objective information - depending on their own past experiences, their memories, their mood, their awareness of their own emotions; the degree and extent to which they are constrained by time and money concerns. The majority of traders are biased as regards the evidential bar that they set themselves and accordingly in the choices that they make at the end of the evidence accumulation process. There is always a confluence of different biases operating at the same time, leading to different belief-movement patterns across different time periods of the day. A trader who succumbs to a conservatism bias cling too strongly to his prior beliefs, and ignores new patterns, whereas a trader who embraces the representativeness heuristic finds patterns in data too readily (oh look it is another Robert Havlin drifter). Whilst people enter the betting market hoping to form evaluations which are the best that can be attained in the light of the available information, in reality most have trouble avoiding hasty judgments, superficial intuitions and careless conclusions. Moreover, at some point or other everybody succumbs to the cognitive bias of illusory superiority and is guilty of overestimating just how rational, savvy and strategically focused they actually are. In nuce, biases in reasoning processes lead to the acceptance of erroneous conclusions.
Countless minor incidents – the kind you can never really foresee – combine to lower the general level of performance, so that one always falls short of the intended goal. Tremendous friction … is everywhere in contact with chance, and brings about effects that cannot be measured… Clausewitz.
Show me a man who claims he is objective and I'll show you a man with illusions. Henry R. Luce
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