Mental Model Fundamentals: Randomness
Much of our lived experience is fundamentally unpredictable and random, yet our human instincts for sense-making and pattern-seeking fool us into seeing causal relationships where none exist.
“The First Law of Randomness: There is such a thing as randomness… The Second Law of Randomness: Some events are impossible to predict… The Third Law of Randomness: Random events behave predictably in aggregate even if they're not predictable individually.” (Source)
Related Examples:
- Gambling - We see a roulette wheel land on seven red numbers in a row, and we assume it is rigged, despite being an outcome of random chance.
- Life - We lose our job on the same day that our spouse leaves us and there is a snowstorm, and we feel like the universe is rigged against us.
- The Course of Evolution
Related Quotes:
- “The fact that something's improbable doesn't mean it won't happen. And the fact that something happened doesn't mean it wasn't improbable.” ~ Howard Marks
- “Warren Buffett's appendix to the fourth revised edition of "The Intelligent Investor" describes a contest in which each of the 225 million Americans starts with $1 and flips a coin once a day. The people who get it right on day one collect a dollar from those who were wrong and go on to flip again on day two, and so forth. Ten days later, 220,000 people have called it right ten times in a row and won $1,000. "They may try to be modest, but at cocktail parties they will occasionally admit to attractive members of the opposite sex what their technique is, and what marvelous insights they bring to the field of flipping." After another ten days, we're down to 215 survivors who've been right 20 times in a row and have won $1 million. They write books on "How I Turned a Dollar into a Million in Twenty Days Working Thirty Seconds a Morning" and sell tickets to seminars.” ~ Howard Marks
- “Life cannot be calculated. That's the big mistake our civilization made. We never accepted that randomness is not a mistake in the equation -- it is part of the equation.” ~ Jeanette Winterson
- “This is the central illusion in life: that randomness is a risk, that it is a bad thing.” ~ Nassim Nicholas Taleb
- “For what are myths if not the imposing of order on phenomena that do not possess order in themselves? And all myths, however they differ from philosophical systems and scientific theories, share this with them, that they negate the principle of randomness in the world.” ~ Stanis?aw Lem
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Related Concepts:
- Probabilistic Thinking - The future holds a wide variety of potential future outcomes, with distinct probabilities and consequences.
- Stochastic (Random) Processes - Statistical processes used to probabilistically describe systems which evolve over time due to random changes of independent variables.
- False Positives and False Negatives (Type I and Type II errors) - Tests can falsely indicate the presence of a condition when it is not present (false positives) and no presence of a condition when it is present (false negatives).
- The Gambler's Fallacy - “You said that 'runs' occur to statistically independent phenomena such as roulette wheel spins.”
- Regression toward the Mean - “The phenomenon that if a variable is extreme on its first measurement, it will tend to be closer to the average on its second measurement.”
- Neurodiversity - “Neurological differences like autism and ADHD are the result of normal, natural variation in the human genome.”
Related Resources:
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