Base rates mauboussin

24 May 2004 This leads to a very basic question: how do you implement these a European war is uncertain, or the price of copper and the rate of interest . 6 Apr 2012 So an enlightened manager would prefer on-base percentage to batting and can be affected by changes in interest rates, in exchange rates, 16 Nov 2012 Michael Mauboussin is Chief Investment Strategist at Legg Mason For example , the A's recognized that on-base percentage is a more September 26, 2016. The Base Rate Book 7. The average estimated return for the focal project was almost 30 percent, while the average for the comparable projects was close to 20 percent. Every subject wrote a rate of return for the focal project that was equal to or higher than the comparable projects. Michael Mauboussin: The Base Rate Book – Integrating The Past To Better Anticipate The Future “People who have information about an individual case rarely feel the need to know the statistics of the class to which the case belongs.”

Let’s learn how to take the outside view and make better decisions. In his book Think Twice: Harnessing the Power of Counterintuition, Michael Mauboussin discusses how we can “fall victim to simplified mental routines that prevent us from coping with the complex realities inherent in important judgment calls.” One of those routines is the

Using base rates as the initial estimate has been popularised in recent years by Philip Tetlock (“Superforecasting”) and Michael Mauboussin (“The Success Mauboussin: Talk about the inside vs outside view, and base rates… Kahneman: Was involved in writing a textbook on decision-making without math for a high 19 Jan 2018 Base rates and reference classes are so important to Mauboussin because good decisions come from good odds. “To me, a lot of investing 12 Feb 2018 Michael Mauboussin, BlueMountain Capital Management: My sense is that there has been a A simple example is the use of base rates.

26 Sep 2016 This book is the first comprehensive repository for base rates of corporate Source: Michael J. Mauboussin, The Success Equation: Untangling

BLUEMOUNTAIN INVESTMENT RESEARCH / DECEMBER 20, 2017 How Well Do You Compare? BLUEMOUNTAIN INVESTMENT RESEARCH Michael J. Mauboussin Director of Research mmauboussin@bmcm.com Years ago, Dan Ariely, a professor of psychology and behavioral economics at Duke University, was surfing the Web when he found an advertisement Mauboussin has written a (small) book on base rates. It's very good and free. It describes the what, why and how of using base rates to inform your decision making in the first 26 pages or so. Then he looks at various base rates of various metrics such as growth, return on investments, and price increases etc. Michael Mauboussin: The other issue that you raise, which I think is a very important one, is the strength and limitations of base rates. And like you said, we have data in many cases back to 1950, and you should ask, and it’s a very valid question to ask, is whether those distributions reflect everything that I should think about might happen. The simplest statistical basis is the “base rate” for that event – the probability of it generally occurring. The outside view, even a simple base rate, is typically a better indicator of the outcome than an estimate derived from the inside view. Mauboussin points out that ignorance of the outside view is not the sole obstacle to its use. How can investors best understand and implement the concept of base rates and mean regression in security analysis? Mauboussin: This is one of the most powerful, and underutilized, ideas in forecasting in general and investing in particular. The basic idea is that there are a couple of ways of thinking about a problem or prediction. If the correlation is zero, you place all of the weight on the base rate. If the correlation is 1.0, you can rely on your own assessment. If you think about this a bit, you can see that it is also telling you about the rate of regression toward the mean.

The Base Rate Book 6 Lovallo, Clarke, and Camerer created a matrix with the columns representing the reference class and the rows reflecting the weighting (see Exhibit 1). The ideal is a large sample of cases similar to the problem at hand. Exhibit 1: Reference Class versus Weighting Matrix

by; Michael J. Mauboussin So the A's looked for players with high on-base percentages, paid less attention to batting For a new entrant to the market, the acquisition rate of new customers is the most important performance metric. But as

There are three things to consider in order to make an effective prediction: the base rate, the individual case, and how to weight the two. There are three things to consider in order to make an effective prediction: the base rate, the individual case, and how to weight the two. Tagged: Insensitivity to base rates, Michael Mauboussin

19 Feb 2020 Now, as we think about those expectations, a discussion on base rates is warranted (as well as a shout-out to Michael Mauboussin, whose 2 Jun 2015 Authors. Michael J. Mauboussin michael.mauboussin@credit-suisse.com We need to look beyond base rates, as informative as they are, to 24 May 2004 This leads to a very basic question: how do you implement these a European war is uncertain, or the price of copper and the rate of interest .