The Problem is Beyond Psychology: The Real World is More Random than Regression Analyses
Nassim Nicholas Taleb
New York University-Poly School of Engineering
Daniel G. Goldstein
Microsoft Research New York City; London Business School
October 10, 2011
International Journal of Forecasting, Forthcoming
Where the problem is not expert underestimation of randomness, but more: the tools themselves used in regression analyses and similar methods underestimate fat tails, hence the randomness in the data. We should avoid imparting psychological explanations to errors in the use of statistical methods.
Number of Pages in PDF File: 4
Date posted: October 10, 2011
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