Herd - the hidden truth about who we are

Lotteries, clustering, probability and herd-thinking

Nice piece in this week's Economist on Britain's love affair with gambling and lotteries in particular (HT @lauradavies24)

Lovely descriptions of how - in the face of systematic randomness (yes, past performance has no impact on future performance) we twist ourselves inside out to make choice easier - we use shorthands to pick winners (including following "expert" advice or familiar or "special" numbers) And how we ignore the simple rule that the more familiar the number the smaller the share of any (randomly-allocated) winning ticket.

As we've discussed before, herd-thinking is particularly tricky in financial decision-making - you often need to stand back and consider the facts of the matter (however hard and unnatural that is!)

But at the simplest level, those of us who play the lottery - the "numerically challenged" as some would have us - often do it because everyone we know's doing it...

Evaluating prediction

This time of year, we're awash with predictions for the coming calendar, so it's really refreshing to see a regular predictor reviewing the accuracy of last year's efforts in the run up to this year's efforts.

Hats off to The Economist (again).

You may not agree with their analysis or their world view, but at least in this way, they're prepared to hold themselves responsible...

Now fashion, tech and other editors and bloggers could you please follow suit so we can begin to learn to read your speculations a little better?

Oh and HM Treasury and the OBR too? They're consistently poor...

What's popular is often what drives our choices

A few times this week I've found myself explaining how useful most of us find seeing what other people are doing.

And then PING in my inbox comes this from my good buddy Nick Blunden

So I - and anyone else who receives this - can have what she/they are having, too.

Nuff said.