{"id":683,"date":"2013-12-12T09:51:27","date_gmt":"2013-12-11T22:51:27","guid":{"rendered":"http:\/\/blog.panicola.com\/?p=683"},"modified":"2013-12-12T09:51:27","modified_gmt":"2013-12-11T22:51:27","slug":"fox-vs-hedgehog","status":"publish","type":"post","link":"https:\/\/blog.panicola.com\/?p=683","title":{"rendered":"Fox vs. Hedgehog"},"content":{"rendered":"

Source:\u00a0<\/span>http:\/\/bigthink.com\/experts-corner\/beware-the-one-trick-hedgehog<\/a><\/p>\n

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Beware The One Trick Hedgehog<\/h1>\n<\/header>\n
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by\u00a0JAG BHALLA<\/a><\/div>\n
DECEMBER 9, 2013, 12:00 AM<\/div>\n<\/div>\n
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\"Unnamed-1\"<\/div>\n

There are two kinds of experts and we often don\u2019t use them wisely. The differences between foxes\u00a0and hedgehogs, and Newton and Darwin, can show when a diversified portfolio of experts is advisable. This year\u2019s Nobel Prize committee in economics evidently agrees:\u00a0It rewarded the apparently \u201copposing\u201d theories of Eugene Fama (efficient markets) and Robert Shiller (animal spirits)<\/a>, which pit reason against passion.<\/p>\n

Philip Tetlock did the relevant experiment, getting established experts<\/a>\u00a0to make\u00a082,000 predictions about political and economic trends<\/a>\u00a0and tracking their accuracy. He found differences in thinking style that could\u00a0predict who\u2019d predict better. Tetlock classified experts using the aphorism “The fox knows\u00a0many things, but the hedgehog knows one big thing.<\/a>”<\/p>\n

Hedgehogs think the world follows simple rules, and prefer a grand unified theory. Convinced they\u00a0possess the One True Theory, they confidently and zealously defend it. This encourages a closed mindset\u00a0which is more prone to\u00a0confirmation bias (squeezing evidence into the theory and discounting what\u00a0doesn\u2019t fit)<\/a>.<\/p>\n

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Foxes believe the world is complex and distrust grand theories. They\u2019re empirically driven, seek locally\u00a0useful rules, and are open, cautious, eclectic thinkers tolerant of counter arguments. Unwedded to One\u00a0True Theory they cope better with ambiguity, see the limits of their thinking tools, often qualify their\u00a0opinions, and more readily adapt to new data.<\/p>\n

Tetlock found that foxes fared better than hedgehogs, who barely beat \u201cdart-throwing
\nchimps.\u201d<\/a><\/p>\n

Despite\u00a0that hedgehogs hogged the spotlight. The media love their certain sounding sound bites and flamboyant\u00a0forecasts. Sadly,\u00a0the most quoted were the worst predictors<\/a>\u00a0and increased
\nconfidence actually decreased accuracy.<\/p>\n

Darwin\u2019s greatest lesson applies: Fit to context is key. Hedgehog-experts are good in fields with stable\u00a0behaviors and known rules. Otherwise, fox-experts are a better bet. This relates to how Newton differs\u00a0from Darwin. Newton worked with unchanging behaviors. His laws can predict detailed outcomes in\u00a0simple closed situations. But Darwin dealt with complex systems of changing parts and behaviors; he\u00a0described the shape of open generative processes (note the cautious foxiness of that plural; \u201cnatural\u00a0selection was the main but not the exclusive means\u201d of evolution<\/a>. These evolutionary\u00a0processes have stable tendencies but less predictable specific outcomes.<\/p>\n

The closer we get to humans and social sciences, the less Newton-like and hedgehoggy life gets.\u00a0Economies, full of changing parts and innovative behaviors, need foxy thinking.<\/p>\n

Aquinas famously feared \u201cthe man of a single book.<\/a>\u201d And we should be wary of experts with a single model. Models are hedgehog thinking incarnated.\u00a0With assumptions built into their structure, they can create \u201cmodel-risk.\u201d Widespread use leads many to\u00a0overlook the same issues.\u00a0The dominance of Fama\u2019s big idea possibly had this effect in the last financial
\ncrisis<\/a>.<\/p>\n

The more we rely on markets, the more important it is to use economic experts wisely.\u00a0Market-loving\u00a0hedgehogs tend to downplay the empirical problems of their beloved system<\/a>. Fixed ideas are risky in a changing\u00a0world; we\u2019re predictably safer hearing also from market-realist foxes. So should we diversify or\u00a0concentrate risks?<\/p>\n

Illustration by Julia Suits, The New Yorker Cartoonist & author of The Extraordinary Catalog of Peculiar\u00a0Inventions.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Source:\u00a0http:\/\/bigthink.com\/experts-corner\/beware-the-one-trick-hedgehog Beware The One Trick Hedgehog by\u00a0JAG BHALLA DECEMBER 9, 2013, 12:00 AM There are two kinds of experts and we often don\u2019t use them wisely. The differences between foxes\u00a0and hedgehogs, and Newton and Darwin, can show when a diversified portfolio of experts is advisable. This year\u2019s Nobel Prize committee in economics evidently agrees:\u00a0It rewarded … Continue reading Fox vs. Hedgehog<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-683","post","type-post","status-publish","format-standard","hentry","category-complex-adaptive-systems"],"_links":{"self":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts\/683","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=683"}],"version-history":[{"count":1,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts\/683\/revisions"}],"predecessor-version":[{"id":684,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts\/683\/revisions\/684"}],"wp:attachment":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=683"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=683"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=683"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}