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Comment by OscarCunningham | Hacker News Reader

What Taleb shows is that people should become more willing to bet as they move away from the "absorbing barrier" of having so little money that they have to quit the game. But he phrases this in terms of justifying the fact that people are more willing to bet with "house money" (money that they have already won) than their own. This is clearly wrong because the starting point is always higher than the absorbing barrier.

I think Taleb is a bit too eager to criticise others, even when his mathematics isn't actually applicable to the situation.

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"A bit too eager to criticize others" is a understatement. Taleb has a lot of interesting things to say, and some of them are even reasonably novel. Unfortunately his general "everybody but me is stupid" approach makes his message much less useful and accessible than it otherwise would be. This is a good example of that problem.

I find this really unfortunate, because Taleb's message about systems behavior being dominated by tail behavior, and about the risks systems not being designed to tolerate that behavior, are very interesting and broadly applicable. Unfortunately, the medium makes the message less effective.

I often think of Taleb as a sort of counter-example when thinking about how to teach and communicate difficult concepts.

He's such a thin-skinned snowflake. I enjoyed The Black Swan but didn't know much about him as a person. He should give up twitter, or stop reading reviews. His fans are hilarious too: he's created a whole cult of redundant pedants.

>whole cult of redundant pedants. aspiring despots

The long tails and the lack of mean of important distributions is essential. However, we are losing those concepts because of his belligerance. A pity.

Contrariwise, many people find his communication style refreshing and entertaining with his book sales being a solid exhibit in favor of that.

Also, most people are stupid compared to Mr. Taleb, that's just a simple function of his observably high intelligence. That said, I've never seen him treat someone as stupid who doesn't first act stupid, and he's demonstrably willing to engage with people publicly on fair terms.

It's a good test though: do personalities like Taleb and Dijkstra entertain you or do they offend you? Introspecting on why they do or don't is a great opportunity for personal growth.

I suspect that you may not be aware of this, so I'm commenting (partially with the hope that someone will figure out a nicer, more effective way to say this): You come across as condescending in a similarly offputting way to Taleb himself.

I do take my own advice about introspection and thank you for your concern.

Much like Mr. Taleb, I just don't see it as a problem. If my personality allows me to appreciate a communication style others have trouble with, without restricting me from appreciating other communications styles that they do not, then I have access to a broader and more diverse set of knowledge and interactions. I find the trade-off acceptable.

> the starting point is always higher than the absorbing barrier.

true - also a tautology

> justifying the fact that people are more willing to bet with "house money" - this is clearly wrong

I don't think you exactly showed that.

I think I showed why his justification is wrong.

But if I wanted to explain why treating house money differently from your own money was wrong I'd use the example of two people who entered the casino with different amounts of money but now have the same amount (somewhere in between where they each started). Then one is betting with house money and the other isn't. But I claim that it would be rational for them to behave the same way. This is because the consequences of having a certain amount of money will be the same for both of them, no matter where that money came from.

Why would it be rational for them to behave the same way?

Because each of their actions have exactly the same consequences.

So A enters the casino with $100 and B enters the casino with $50 -- he then proceeds to double them, whereas A remains steady. So, now both have $100, and B plays with just the house money.

A is losing money they had put aside -- B is losing money he didn't have to begin with.

E.g. A might be playing with borrowed mafia money, or his kids college fund (and risks losing them), whereas B doesn't risk going anywhere below where he was when he entered the casino. If anything, he has a chance to make his winnings even bigger (or at worse, lose them).

In real life (as opposed to thought experiments treating those persons like abstract entities) the origin of those money has a story, so the A=B=100 state is not all that matters to determine the consequences.

Sure. By altering external factors we can make the agents do whatever we want. Perhaps the fact that B only brought $50 indicates his frugal nature, and suggests that he also has a better financial situation outside the casino.

>Sure. By altering external factors we can make the agents do whatever we want.

You say it as it's some kind of cheating -- instead of enriching the in vitro abstract example with real world impact, and showing why its abstract conclusions don't apply to the real world.

So Taleb says the function that controls how you spend your money is a path function and you say that it is a state function. does anyone know how this could be tested? or does anyone have any good gedankenexperiments to illustrate the difference that they would like to share?

I'm not claiming that they will make the same bets, just that it would be in their interest to do so.

so the sunk cost fallacy is a similar case. rationally, a budget is a state function, but people tend to think of it as a path function. thanks for explaining.

As someone that makes casino games and is an active gambler, I have to disagree with this assessment. The amount of money a person initially brings to the casino is often a function of many variables of their life outside the scope of a casino visit. I've gone to the casino with $500 (my ATM limit) alongside someone who brought $5,000 only to see us both end up with $1,000 in our respective pockets. The different variables that caused us to bring the initial sums definitely influenced our behavior once the values equalized. Income, assets, risk adverseness, etc. that all influence the initial sum still come into effect later on when the sums equalize.

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