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Comment same mathematical mistake as the financial crisis (Score 3, Interesting) 538

The mistake is presume that the factors are independent of one another. When you assume independence you can take the logical intersection of the probabilities which is multiplying less-than-unity probabilities together. You can obtain a rather small result choosing enough factors. But if the factors are correlated, the correct mathematics is the largest probability number. Both the astronomical conditions and girlfriend factors are correlated to some degree makeing the results less than valid.

This is the identical mistake made valuating debt securities. The mathematical underpinning was that you can offload most of the risk into a "junk tranch" by assuming failures like foreclosures are statistically independent. By "drake equation magic", i.e. multiplying probabilities to obtain the group probability, the group risk appears rather small. Independence is a decent assumption during good economic times because economic failures are more individual luck or actions. But during a recession, economic failures are correlated, making the group statistical model invalid. The so-called good-risk securities turned into garbage and the junk securities became gold.

I fear since a economics grad student does not understand probability like so many of his peers, this does not bode well for the future economy.

Comment Re:Only management is fooled (Score 1) 344

Ya, it does, it's the whole point of her whole couch story.

Why she feels that relates to tech at all is beyond me, except that she doesn't like being around men apparently.

I could care less if there are more women techies or not, but then I'm functional outside the technology world as well, so don't have problems interacting with women in other environments.

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