Here are some conclusions from the discussion:
- Predictions are difficult in culturally biased realms, including media and investment ideas.Through a novel experiment, researchers showed an average song can become a hit or a clunker based on the principle of cumulative advantage.
- Investors should think probabilistically. However, they must show considerable caution incounterfactual thinking, an exploration of what could have been. Further, counterfactual thinking can lead to some suboptimal behavior.
- We often make up causes for the effects we see. Management tomes are filled withadvice derived from reverse-engineering the success of leading companies without awareness of how specious the claims are. As theories become more robust, they often rely more on circumstances than attributes.