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Lars P. Syll — Methodological overconfidence

Summary:
You can't get more mileage out of your model than the assumptions contain. It's called "scope."Overconfidence or sleight of hand? The presumption is that professionals know better. But if they admit the scope, their influence would be limited.  This could also be accounted for by professionals acting unprofessionally owing to perceived advantages of doing so. So either way, perverse incentives seem to be in play.Lars P. Syll’s BlogMethodological overconfidenceLars P. Syll | Professor, Malmo University

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You can't get more mileage out of your model than the assumptions contain. It's called "scope."

Overconfidence or sleight of hand? The presumption is that professionals know better. But if they admit the scope, their influence would be limited.  This could also be accounted for by professionals acting unprofessionally owing to perceived advantages of doing so. So either way, perverse incentives seem to be in play.

Lars P. Syll’s Blog
Methodological overconfidence
Lars P. Syll | Professor, Malmo University

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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