Monday, February 08, 2021

Order from Disorder

The human brain is so wired for detecting patterns, our desire for order in a universe ruled by chaotic behavior so great, our need for a narrative so ingrained, that we detect patterns and create a narrative from them that implies order, even when there is no actual story to be told. It is both our greatest weakness and our greatest strength. Which is why we need to stick to the scientific method and be evidence based. That is a kind of narrative generation too, but it is a story we reject when it no longer matches the facts at hand. Many synthesized narratives imply order when reality may be nothing more than rational but uncorrelated actors responding similarly to a common set of incentives.


Fazal Majid said...

There is a similar phenomenon known as overfitting in statistics.

Chip Overclock said...

Financial watchdogs like the U.S. Securities and Exchange Commission apply Game Theory to distinguish between independent actors and real conspiracies like price fixing.