On a recent EconTalk episode on randomness, the guest, Campbell Harvey provided an interesting example at the intersection of probability and gullibility. I paraphrase:
Suppose you get an email predicting the winner of a football game. You ignore it, but after the game, you notice that the prediction did come out true.
Probably lucky, you say to yourself.
The next week you get a similar email predicting the winner of another football game. You later find out that that prediction also came true.
This happens for ten weeks in a row.
The emailer correctly predicts the winner in every game.
You sign up for the newsletter!
But what's going on behind the scenes. The emailer spams 100,000 email address; in half of them he predicts Team A is going to win, and in the other half he predicts that Team B is going to win.
One set gets the "correct prediction".
The following week he spams the 50,000 recipients who got the correct prediction. Again, he goes 50-50.
You see where this is going.
After 10 weeks, by pure chance, there will be 100 "suckers" who think you got 10/10.
Don't be a sucker!
Suppose you get an email predicting the winner of a football game. You ignore it, but after the game, you notice that the prediction did come out true.
Probably lucky, you say to yourself.
The next week you get a similar email predicting the winner of another football game. You later find out that that prediction also came true.
This happens for ten weeks in a row.
The emailer correctly predicts the winner in every game.
You sign up for the newsletter!
But what's going on behind the scenes. The emailer spams 100,000 email address; in half of them he predicts Team A is going to win, and in the other half he predicts that Team B is going to win.
One set gets the "correct prediction".
The following week he spams the 50,000 recipients who got the correct prediction. Again, he goes 50-50.
You see where this is going.
After 10 weeks, by pure chance, there will be 100 "suckers" who think you got 10/10.
Don't be a sucker!
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