Lee Smolin claims that AP is bad and favors a Cosmological Natural Selection view instead (on grounds of falsifiability).  I believe this is a false dichotomy and that they are really one and the same.  Here’s why:

1. Normally natural selection requires some form of “replication” or it’s not actually natural selection.   But replication is not needed if you start with an infinity of heterogeneous universes.  In other words replication is simulated via the anthropic lens over the life-supporting subset of all possible universes.
2. Replication is a red herring anyway since it presupposes time (or at least well-ordered events).
3. I conjecture that the distribution of universes is unimportant, as long as all possible universes are represented in the multiverse (i.e. the distribution can be random).

It’s worth noting that this is a purely a metaphysical/logical argument and says nothing about specific physics or cosmologies.  One of the things that makes it hard to see why this is true from reading the Smolin/Susskind debate is that they bounce between the logical argument and various proposed, unimportant details (like whether black holes are the replication mechanism in question or not).

More importantly though, we hear scientists call one another “unscientific” whenever they propose an hypothesis that is unfalsifiable.  Here’s why I think that’s problematic:

• Ever since Popper, science has been obsessed with falsifiability, which is really about assuring consistency.
• Godel proved that there are true statements that cannot be proved.
• More specifically he unpacked “truth” into completeness + consistency and showed that we can’t have both simultaneously.
• Due to extant complexity (let alone potential infinity) completeness is out the window.
• If science is only concerned with consistency, then it’s a pointless endeavor; I can sit here all day and generate tautologies that are neither interesting nor useful.
• If science is about truth, then there needs to be a way of expanding the set of discovered tautologies along the completeness dimension as well.
• There are at least three formal logical systems which do that without sacrificing consistency: deduction, induction and abduction.
• Only deduction is formally falsifiable.
• But science relies on induction and many other forms of evidence too (statistical reasoning, clinical trials, simulation, storytelling, etc); this is the “democracy” Smolin himself referrs to in his TED talk.
• The structure of the Anthropic Principle is abduction.  So is the structure of Occam’s Razor.  And depending on who you believe Bayesian inference is either induction or abduction.
• Conjecture: Newton’s Calculus is a formalism based on abduction.
• Conjecture: strong emergence (aka novel emergence) is fundamentally abduction.  This may be why science has such a hard time with it.
• Conjecture: natural selection is fundamentally emergence/abduction.  This may be why Creationists have such a hard time with it.

There is no one true definition of what constitutes “Science.”  We hear reference to the so-called Scientific Method.  Ultimately, the holy Scientific Method is whatever scientists as a whole do; no more and no less.  To say otherwise is ad hominem.  Now I’m not claiming that ad hominem argument shouldn’t be counted as scientific evidence, but anyone who bows before Popper would.  The irony there is that ad hominem is a form of Bayesian inference.  And if you’re keeping score, that means that anyone who claims that you are being unscientific if you don’t forsake all unfalsifiable idols, is themselves committing the sin of inconsistency.  Which by their own logic means they are unscientific too.

To which I respectfully submit, their pants are on fire, hanging from a telephone wire.  And that’s a scientific fact.

Related posts:

1. The Process
2. Science 2.0
3. Non-Dualism

Now lets assume there is some process for picking out universes from the multiverse.  Since there’s no time in the multiverse, the process has no beginning and no end.  It’s like a computer program, but it’s infinitely complex.  Let’s call it The Process.

If The Process is infinitely complex and has no beginning and no end, what can we know about it?  We know that it picks some universes but not others, which effectively creates an “in group” (all those that are picked) and an “out group” (all those that are not).  Of course, both sets are infinite and still have no structure.  But note that all the universes in one group or the other now stand in relation to one another.  That is, they share the property of “in-ness” or “out-ness”, and between the two groups there’s the relationship of “different”.

The Process further divides these sub-multiverses in unknown ways, and this sorting creates other relationships between universes.  You can visualize a network of universes with the connections representing these relationships.  The network is infinite, and if you consider any subset of the network, it’s also infinite.  But these subnetworks are no longer arbitrary, they are networks themselves and networks have structure.  And since a subnetwork by definition shares the same connection relationships as the original network it is a “sub” of, the subnetwork is structurally similar to the network itself.  That is, the network is self-similar, which in mathematical terms means it’s fractal.  Of course this fractal we are talking about is infinite, and so wherever you start, it’s turtles all the way down, and all the way up.

Notice that the process of identifying subnetworks does something interesting, it creates an asymmetry that wasn’t distinguishable before.  For any network N, if you choose a subnetwork, n, then N “contains” n but not vice versa.  This containment relationship can viewed as a network where the connections are arrows, meaning they have directionality, N –> n.  You may have noticed that we just went from talking about a network of universes to a network of networks (of universes), but that’s okay.  Remember the multiverse is infinitely infinite, and we’re just chatting about some arbitrary aspects of it.  There’s lots of other aspects we could talk about instead, but it’s starting to get interesting here, so let’s continue….

Somewhere in the fractal multiverse network of networks described by The Process there is a subnetwork (actually an infinite number of them) where the structure is like this: each universe is connected to by only one other universe but connects to an infinite number.  Let’s call this structure, Time, and note that there are an infinity of subnetworks of the network which have this Time structure.  Unless stated otherwise, I’ll be talking from now on about networks with Time structure.

Remember though, the multiverse itself has no structure; The Process overlays structure on top of it and thereby allows us to know about things like Time.

Now let’s start using the words network, system, particle, entity, agent and universe interchangeably, so we can say things like “time network”, “temporal system”, “particles over time”, and “A causes B” to refer to roughly the same thing.  I realize that by overloading these terms I’m jacking into (and hopefully hijacking) your intuition about what these words mean, but that’s my intent.  Hopefully you’ll continue playing along by my rules and try not to project what you already know onto this alternative cosmology.

When we use the words network, system, particle, entity and agent, you might wonder whether we are talking about a universe or a multiverse.  The answer is Yes.   Remember, the multiverse is infinitely infinite and self-similar, so in some sense we can say it contains itself.  We have a hard time with infinity so this concept is mind-boggling, but if you follow the logic, hopefully you’ll accept this paradox as true.  So lets just use the word universe from now on and forget about multiverses.  And to not get confused, let’s refer to what we used to think of as the Universe as the known universe instead.  The known universe is where you live (or more precisely where you think you live) along with everyone and everything you know about or can imagine.

The known universe is expanding the more you learn about it.  The known universe is temporal.  And as we know from Einstein, it must therefore also be spatial — remember it’s not space and time but rather the spacetime continuum.  The known universe consists of particles (i.e. matter) and therefore — also thanks to Einstein — it consists of energy.  Time, space, matter and energy here may or may not be totally in sync with our intuitions of them, but just suppose they are the same thing and that our intuition is slightly biased by our particular experiences in life and could use adjustment.

We haven’t really talked explicitly about laws of nature, fundamental constants, invariant equations or even mathematics.  And I kinda jumped the gun when bringing Einstein into the equation (so to speak).  But it’s really hard to follow a line of thought without some sort of logical paradigm, some structure of thought.  In the end it doesn’t really matter what I’m saying, what you’re hearing, or whether any of this is “true”.  I’m just telling you a story, and hopefully it’s amusing enough for you to finish reading.

Originally we talked about The Process, which is infinitely complex and which describes all sorts of possible realities.  The known universe is one of those possibilities, one in which we see structure and patterns, order and complexity all around us.  Somewhere “out there” there may be portions of the multiverse (whoops, I said I wasn’t going to use that term anymore, sorry) where it’s still appears, unstructured and thus unknowable.  But let’s come back to the known universe and the “knowable” universe.

Because of the fact that we are here in the known universe thinking and talking about it, and not in some unknown or unknowable part, the non-random patterns that we see may look to us like universal laws (E=mc^2, the second law of thermodynamics, etc.)  Well, we know that even these laws are not truly universal, they apply to only certain scopes.   For example, “relativistic but not classical or quantum realms”, or “closed systems but not open systems.”  String theorists are looking for universal laws, but so far none have been found.  But let’s just grant them that they will eventually find some (or one).  How would we be able to distinguish between a true Law and just a pattern that is very very persistent over all known scopes?

How about we stop using the word “law” and instead replace it with the word “principle” to suggest that it may really just be a pattern that we see in the known universe.  And as the known universe expands via our increase in knowledge/understanding/awareness, we might find exceptions to the pattern.  After all, that’s what’s happened to every “law” ever considered in the history of science so far, and why should that pattern stop?  (Sorry, my paradox detector just went off, let me reset it….)

Coming back to principles, there’s one that emerged from the last few paragraphs, did you notice it?  Cosmologists call it the Anthropic Principle, which is the notion that the universe appears ordered in the particular way that it does with these nifty laws and constants because of the very cosmic coincidence that we are here observing it!  In other words, we live (and can only live) in the known universe, by definition.  And we wouldn’t be “here” and able to “notice” anything if we were in some unknowable part.  That’s a pretty trippy concept, but one that many physicists take very seriously.  It’s the same kind of argument as for why we haven’t been contacted by aliens yet: there’s a decent chance we are the most advanced intelligence out there and we’ll have to wait for others to catch up so we can communicate.  It’s also the reason that your keys are always in the last place you look.

Remember the Anthropic Principle because it’s really useful.  It has the same logical structure as Darwinian evolution and other “emergent” phenomena.  Is this Generalized Anthropic Principal (GAP) a universal/fundamental one?  Who knows.  Probably not.  We anthropic agents are so self-absorbed.

Another principle that emerges from our cosmology is Coherence.  Because of The Process, birds of a feather flock together.  Actually, The Process defines which birds are of which feather, so this is a tautology, though it’s fun to think of it as “like attracts like”.  But we know that really it’s just co-incidence: the birds exist at the same Time.  Using the analogy of birds, we can ask whether these coincident birds are different birds or the same bird.  But it’s a silly question because the answer is Yes.  Think of quantum coherence, if you like.

Now let’s say we are talking about particles and not birds, and instead of Coherence we’ll say Gravity.  Isn’t it the same thing?  We talk about stars and planets and other astral bodies as if they were coherent entities, but If there were no gravity, would those entities exist?  Or let’s talk about the Cooperation of the cells in your body; without it, would you exist?  We’ve all heard about the “law of attraction” from The Secret, isn’t it the same thing?  You imagine the future you want, and that acts as a beacon guiding you in every decision you make, every micro-decision, every unconscious action until at some point you find yourself living in the future you imagined.  Coherence, cooperation, attraction, unity.  Same thing.

Here’s a secret: there is no Process.  Or if you prefer, The Process is completely random.  Yet that doesn’t change anything I’ve said above.  Think of it this way: in an infinite series of random numbers, all patterns appear eventually, right?  So “somewhere” in the infinite randomness, The Process “produces” the structure I’ve been talking about.  Or maybe the fact that we’re anthropically talking about it produces the structure.  We are The Process.  Or more generally, we humans are part of The Process.  The Process is the universe.

Related posts:

1. Why Falsifiability is Insufficient for Scientific Reasoning
2. Notes from TED
3. Synthesis of Complexity Theory

Kafka gave us The Metamorphosis.  We have the power to realize our own humility.  Being wrong is irrelevant if you learn from your mistakes and prevent systemic risk from such errors.  How can we be so content with our wisdom if we continually ignore this vital lesson.  As Wikipedia suggests, some people mistakenly dismiss The Zeitgeist Movement of being similar to Socialism, which could not be more wrong.  Emergent systems are the building block of The Zeitgest Movement, while socialism tends to ignore incentives between the group and the individual.  Most “losers” of history tend to argue that their system of beliefs wasn’t implemented correctly.  But they are right!  Thomas Sowell suggests that WHO is making the decision is the most important aspect of any system.  I urge you to skim this excellent summary of the book.

Zeitgest Movement is a school of thought that grounds itself in its humility and focuses on learning and technology to achieve a kind of Truthocracy I’ve been posting about.  The Zeitgesters are working to create a system for continual improvement where the incentives of the individual are aligned with those of the group.  Where the decision maker is in a continual iterative effort to harvest every drop of wisdom from the group prior to making the decision.  Let’s not be naive though – we have to be honest and humble in this pursuit and continually strive to improve the knowledge gathering algorithms.  We must also beware of students bluffing their way to teaching.

“The Internet was not the first technology to disrupt a few business models. From the printing press to the player piano, one generation is always calling the next a pirate”.  The aim of copyright law was to aid in learning by BALANCING the rights of the authors and readers (teachers and students).    Balance between the copyright and copyleft is the key.  Removing the obstacles for a balanced use of the rational and creative sides of the brain is the trick to achieving flow:
“Alice Flaherty argues that creativity is due to a balance of frontal and temporal lobe activity. In other words the trick is not, in fact, to get out of your “left brain” and into your right, but to increase activity in the right hemisphere (or reduce activity in the left) so it matches the activity on the other side.” Source

Awareness  vs “Bewareness” is the eternal and internal battle of the present imagination and past “experience”.  Our goal then must be to reduce obstacles to balance to create flow in all systems.

Rafe was here more than 2 years ago:
“- Cooperators and defectors co-exist
- “Cooperators survive in clusters”
- “Cooperators can invade defectors when starting from a small cluster”
- One interesting dynamic occurs when two self-sustaining “walker” sub-populations collide into a “big bang” of cooperation which largely takes over the population.”"

So it is very reasonable that I would have never learned this or learned it years from now if i didn’t start Googling my hypotheses.  Ultimately the resource focus of Zeitgest will revolve around the speed of learning, which resides within you – your own willingness to learn, teach, and stay humble.

Please watch the Zeitgeist Addendum, and RIP: Remix Manifesto

Then facebook and twitter it (buy a copyleft t-shirt to spread the word and create more balance).  You can’t have big bang without them.

Related posts:

1. Notes from TED
2. Decision Education Foundation
3. Peanut Butter and “Culture Jamming” Sandwich

Mobile internet in Japan has been years ahead of other countries, so it is reasonable to believe that their interactions are occuring at a much faster pace.  If there’s one trend that’s always been present it is the increase in frequency and abstraction of interactions (aka learning).  Isn’t it possible that we’re witnessing a transformation from the real to the digital world there first? 

1.  All iWant for Xmas is an android (via Marginal Revolution).  Make sure you click on the video
2.  Man Marries Virtual Bride (via Marginal Revolution):

Ultimately we cannot know if we’re a machine or not, it just not optimal to stop either way, but the only way to not be alone (“an expert is someone who knows more and mroe about less and less until they know absolutely everything about nothing”) is to bring others along with you.  Difference between parallel processing and whatever dr Singularity call the other type.  I’m not there yet.  We are all teacher and students at achieving infinite “flow“.  Our bodies can only get us so far.

Related posts:

1. Complex Links: TED
2. Micro –> Macro –> Micro, etc.

If you grew up like me you were brought up in a culture based on a dualist metaphysics, one that asserts that there is an objective reality outside of ourselves (whatever “we” are) and that we know about it indirectly through our senses and conscious reasoning.  This is the basis of the Western traditions of science, liberal arts and symbolic systems (such as mathematics and human language).  Essentially anything that can be studied is part of this metaphysics.  Gödel showed us that this metaphysics will never lead to complete knowing, though everyone agrees we can continually refine our knowledge and thereby at least asymptotically approach enlightenment.

Descartes proved to us that each of us individually do indeed exist, and he tried to argue further that the universe as we perceive it — however imperfectly — does indeed exist too.  But before you drink too deeply from the Cartesian well, keep in mind that his argument for an external reality depended on the existence of a benevolent God, one that would not deceive us with such an elaborate ruse as to make the world seem so real when it wasn’t.  His whole argument after cogito ergo sum is logically flawed.

There are other metaphysics that assert reality is entirely subjective, that there is no reality outside of ourselves.  This of course begs the question of who “we” are such that reality can exist or not outside of us.  But to even ask this question is to miss the point.  Knowledge is direct, we “experience” it; and if we have no expectation, no attachment, no judgement, then we can truly understand.  Anytime we engage in the act of thinking, we break from our direct, immediate, complete knowledge of who we are and knowledge of everything there is to know.  This of course is the metaphysics of Zen Buddhism, Taoism and other Eastern traditions.

I am in danger of losing anyone reading this if I don’t immediately disavow this second way of knowing in favor of the first.  There are many who consider themselves intelligent — whose very self-image is based on intelligence — who will be saying to themselves right now that experience without thought is all well and good as a tool for getting to insight.  But ultimately insight (and knowledge and knowing) requires thought.  And in particular it requires thought that is self-consistent, which is to say rational and logical.  The worst things in the world to such a person are logical inconsistency and paradox.  There are fundamental laws at work, not just about the universe but also about knowing.  These believers will invoke the trinity of Occam, Bayes and Popper, but they forsake the word of Gödel: you can choose consistency, or you can choose completeness, but you can’t have both.

For those of us who have already cast ourselves out of the garden of completeness, all I can say is that it is never too late to reconsider how seriously we take all this cogitation.  I mean after all, what’s the harm in exploration as long as we always have our very capable minds to help us navigate?  With this in mind, I have begun to reconsider certain assumptions.  And for those of you who recall my very first post, the willingness to do so was the only rule that I imposed on myself and insisted of those who wish to engage.

Because we all have different experiences in life, we each have a different internal “language” with which we receive truth and gain understanding.  Those of us who come from the Western tradition — which is to say anyone who thinks of themselves as a thinker — we are in need of more practice in letting go of the map and experiencing the terrain directly.

Have you ever noticed that when someone speaks deep truth (no matter what “language” they are speaking) you get a sense of deep resonance that is beyond words and conscious thought?  I certainly do.  And another thing I notice about these experiences is that they only happen when I stop engaging my analytical mind to critique or compare what the person is saying to what I already “know”.

If we cling to faulty assumptions in the face of truth we feel discord of some form (anger, embarrassment, indignity, righteousness, etc).  But I view this as really another form of recognition of the truth before us.  It’s a sort of allergic reaction to the invading memes that would damage our internal edifices, the faulty assumptions that protect our egos and our ideas of who we are.  To embrace the truth often means a level of change we are not yet willing to undertake, and which we may never be willing to undertake.  In the face of such high stakes, we rationalize away the truth in order to preserve internal consistency and harmony.

As an experiment to illustrate this point, consider your immediate gut reactions to the following statements one at a time:

1. “There are ways of knowing that are beyond science, beyond analytical thought, and they are crucial for you to engage in if you wish to get past your limited understanding of the universe.”
2. “Think about that one thing you know with all your being to be true.  Got it?  Well, it’s not true. You believe in a falsehood, a convenient fiction that you use to deny the veracity of your deepest fears.”

Is it possible to not have a negative reaction to at least one of these two statements?  Most people would say no.  If you are comfortable with both statements, congratulations, you have broken free of the shackles of narrow-mindedness that bind most of the world.

If you are like me, you have no trouble at all with Statement 2, but feel at some level that Statement 1 is new-age horseshit, at best an opiate for the masses but at worst a very dangerous conceit.  So let’s take a deep breath and use this as an opportunity to explore what’s causing the negative emotion so that we can challenge those assumptions and thereby learn.

My reaction to Statement 1 is based on the denial of the value of my personal identity as a thoughtful, analytical, intelligent person, one that doesn’t do things that are irrational.  If Statement 1 is true, then my life is less valuable than I had presumed, perhaps even valueless.  Man that would suck.  If I take Statement 1 to be true then I will be forced to change who I am in order to once again feel as valuable.  I might even be forced to participate in a seance and other freaky and totally pointless activities.  Not gonna happen, I don’t have that kind of time to waste.  I could be making the world a better place or at least pursuing my own happiness.

Sounds a bit silly when I type it out.  After all, what’s the point in making the world a better place if we’re all dead anyway (on average a true statement if you are a stats geek).  And as for happiness, I know most of the literature, and I have to admit, as happy as I am there are some proven paths to happiness that I have yet to fully explore and they fit squarely in the experiential, non-analytical sectors of life.  So what could be the harm in turning off the analytical mind a bit more and experiencing without judging?  At worst maybe I’ll be a bit happier, and at best maybe I will become more effective at making the world a better place. But is this direct experience actually valid from an ontological perspective?

Even within the Western analytic tradition there are themes of experiential knowing.  Psychologists now speak (very analytically of course) about the state of Flow.  In Flow, we are so thoroughly engaged in the task at hand and so perfectly in sync that our experience of time changes dramatically.  We are able to achieve extraordinary performance, effortlessly and without thinking.  Gladwell popularized this concept in Blink, claiming that the vast parallel processing power of the human brain and nervous system for useful cognition is largely untapped (or masked) when we focus on conscious reasoning.  To tap into the full potential of the mind, we need to apply techniques to short-circuit our conscious thought processes.

Every professional athlete, musician and performance artist is familiar with Flow/Blink, and you’ve no doubt experienced it many times yourself.  For me, it’s usually been when engaged in a sport where there is little time to think (like ping-pong, volleyball or snowboarding).  In the mental realm, I have been able achieve leaps in performance and rely heavily on on my “blinking” ability — whether it be playing poker, brainstorming, writing, or just interacting in a positive way with those around me — by orchestrating a Flow state.

I’m still learning what best puts me into Flow, but it seems to be some combination of prolonged intense concentration, mild sleep deprivation and small amounts of psychoactive substances like caffeine, modafinil, marijuana, or alcohol (though I must say that too much substance, or combining it, always kills the flow for me).  Recently I’ve found that adding in physical movement or music also help trigger Flow.  On this last front, while most people would say “what took you so long,” it’s worth pointing out that every person is unique in terms of what works for them.  For instance, what most people refer to as meditation (i.e. eyes closed, absolute stillness of body and mind) doesn’t do much for me.  My mind somehow responds better to hyper stimulation than tranquility.

Early in life, learning is mostly the process of of creating new structure out of noise.  As our adult minds form, this structure creation that was once crucial in our learning process becomes a beast of burden and we lose our mental plasticity.  To counteract this imbalance we must consciously re-integrate those activities that we had no trouble jumping into as a child.  The challenge is not to let our egos and silly notions of personal identity get in the way of our beginner mind.  Ken Robinson makes this point as well as anyone I’ve encountered, and I invite you to sit back and enjoy for the next 20 minutes with your own beginner mind:

Click here to view the embedded video.

As for me, I’m off to my favorite yoga studio to participate in kirtan and tap into some good communal vibes.  Maybe I’ll even hit the Buddha along the way.

Related posts:

1. Why It's Important to be an Optimist
2. Believers and Atheists Need Not Apply
3. The Nature of Innovation

“So the central lesson from decision-making (as opposed to working with data on a computer or bickering about logical constructions) is the following: it is the exposure (or payoff) that creates the complexity —and the opportunities and dangers— not so much the knowledge ( i.e., statistical distribution, model representation, etc.). In some situations, you can be extremely wrong and be fine, in others you can be slightly wrong and explode. If you are leveraged, errors blow you up; if you are not, you can enjoy life.

So knowledge (i.e., if some statement is “true” or “false”) matters little, very little in many situations. In the real world, there are very few situations where what you do and your belief if some statement is true or false naively map into each other. Some decisions require vastly more caution than others—or highly more drastic confidence intervals. For instance you do not “need evidence” that the water is poisonous to not drink from it. You do not need “evidence” that a gun is loaded to avoid playing Russian roulette, or evidence that a thief a on the lookout to lock your door. You need evidence of safety—not evidence of lack of safety— a central asymmetry that affects us with rare events. This asymmetry in skepticism makes it easy to draw a map of danger spots.”

If you want a quick refresher of The Black Swan.  Know what quadrant your distribution can belong to and what “moments” of the distribution are important to the decision you’re trying to make.  There are more rules/tips if you follow the link:

“Bottom Line: The Map

Things are made simple by the following. There are two distinct types of decisions, and two distinct classes of randomness.

Decisions: The first type of decisions is simple, “binary”, i.e. you just care if something is true or false. Very true or very false does not matter. Someone is either pregnant or not pregnant. A statement is “true” or “false” with some confidence interval. (I call these M0 as, more technically, they depend on the zero^th moment, namely just on probability of events, and not their magnitude —you just care about “raw” probability). A biological experiment in the laboratory or a bet with a friend about the outcome of a soccer game belong to this category.

The second type of decisions is more complex. You do not just care of the frequency—but of the impact as well, or, even more complex, some function of the impact. So there is another layer of uncertainty of impact. (I call these M1+, as they depend on higher moments of the distribution). When you invest you do not care how many times you make or lose, you care about the expectation: how many times you make or lose times the amount made or lost.

Probability structures: There are two classes of probability domains—very distinct qualitatively and quantitatively. The first, thin-tailed: Mediocristan”, the second, thick tailed Extremistan. Before I get into the details, take the literary distinction as follows:

In Mediocristan, exceptions occur but don’t carry large consequences. Add the heaviest person on the planet to a sample of 1000. The total weight would barely change. In Extremistan, exceptions can be everything (they will eventually, in time, represent everything). Add Bill Gates to your sample: the wealth will  jump by a factor of >100,000. So, in Mediocristan, large deviations occur but they are not consequential—unlike Extremistan.

Mediocristan corresponds to “random walk” style randomness that you tend to find in regular textbooks (and in popular books on randomness). Extremistan corresponds to a “random jump” one. The first kind I can call “Gaussian-Poisson”, the second “fractal” or Mandelbrotian (after the works of the great Benoit Mandelbrot linking it to the geometry of nature). But note here an epistemological question: there is a category of “I don’t know” that I also bundle in Extremistan for the sake of decision making—simply because I don’t know much about the probabilistic structure or the role of large events.

The Map

Now it lets see where the traps are:

First Quadrant: Simple binary decisions, in Mediocristan: Statistics does wonders. These situations are, unfortunately, more common in academia, laboratories, and games than real life—what I call the “ludic fallacy”. In other words, these are the situations in casinos, games, dice, and we tend to study them because we are successful in modeling them.

Second Quadrant: Simple decisions, in Extremistan: some well known problem studied in the literature. Except of course that there are not many simple decisions in Extremistan.

Third Quadrant: Complex decisions in Mediocristan: Statistical methods work surprisingly well.

Fourth Quadrant: Complex decisions in Extremistan: Welcome to the Black Swan domain. Here is where your limits are. Do not base your decisions on statistically based claims. Or, alternatively, try to move your exposure type to make it third-quadrant style (“clipping tails”).”

Related posts:

1. Fixing Health Care I: The Uninsured
2. Stability Through Instability
3. You Can't Pick Winners at the Seed Stage

“Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime”.  But what if we teach a man to learn?

Was Thomas Edison a genius or “merely” a hard working tinkerer?  Did Newton really discover gravity when an apple fell on his head or was this “discovery” incremental and inevitable?  It is becoming apparent that existence of genius is mostly a product of our imagination, since most “geniuses” are a result of effort and practice.  Thomas Edison not only had an incredible number of inventions, but also an incredible number of failed inventions.  10,000 hours to become the best?  Guess what, that # is dynamic and based on how well the body of knowledge is arbed of inefficiencies.  Tyler Cowen regularly reminds us of “Markets in Everything” to show that markets necessary but not sufficient to allocate resources optimally.  Some even think the technological progress is inevitable!

If a breakthrough is made we never look at “risk adjusted” genius of the discovery by factoring in all the failed hypotheses.  We never bother to ask HOW the hypothesis came about.  Studying emergence completes the scientific method, by simulating the implications of our understanding/model of reality, which we can then either test against data from the real world (physical systems) or at the very least eliminate and improve current theories about social sciences.

Anyone who’s been remotely interested by emergent phenomena should by now start realizing that it pops up in nature, physical sciences, social sciences, the brain, and pretty much anywhere we look.  However it is not simply an attempt to create a more complex model – it is a phase shift in the way of thinking.  It is an improvement of the scientific method.  It is an attempt to create a systematic way of forming hypotheses.

Yes, artificial intelligence of this sort is highly sensitive to the initial inputs and some say will always be less complex than the agent creating it, but who ever said that the scientific method will replace us.  Talk about throwing the baby out with the bath water.  Evolution and survival of the fittest are only half of the story.  All life simply strives for better ways of predicting the future.  Haven’t you ever seen a dog learn? J  It is time for this old dog to learn how to learn new tricks.  A human aided with “artificial intelligence” is emergently superior to one without such a tool.  Yes, we are in many ways better at predicting than a machine, but the point is to catch ourselves in the error of our ways through the use of data mining.  Once sensitivities are detected, data should be collected and mined.  Yes, there are plenty of questions and fields which are too complex or have to be looked at the whole, but if there is something to be found and ARBITRAGED away through rationality, it will be found.  Some take 10,000 hours, some take 20,000.  It is the same as the relationship between the bid/ask spread and the liquidity of the market.  There are also major structural historic path dependence issues.  There is a potential of going back and forth between different states and seemingly being trapped in a sort of gambling paradox, but even if I am a drunk looking for my car keys where the light pole is, simply because it’s easier to see, if I DO see a $20 bill on the ground, I will gladly forgo the opportunity cost, bend over and pick it up.  I assure you that the risk adjusted probability weighted net present value of this endeavor is positive.  Because guess what, we ARE human (we’re not quite yet dancer).  People make mistakes, have sins, and are sometimes a product of the inefficiencies of the current systems.  That $20 could have ended up there for a million reasons as a result of the irrationality of humanity.

Learning, Capitalism, and Politics

That is why investing is an acceptable form of gambling.  More advanced and adaptive beings are “profiting” for the inefficiencies of others.  The process where such trade isn’t necessarily beneficial/fair for both parties is if the more “advanced”/”adaptable” being is CREATING and deceiving the less complex being into matrix slavery (where a steak is better than a burger, but worse than lobster).  That is why education is good “investment” and shall also be seen as such. It is one of the best ways out of the matrix.

It is also incredibly dangerous to allow high leverage, because miscalculations cannot be allowed to pose systemic risk.  So let’s fire up our data miners (it’s not a dirty word;  Blog) and simulators and turn that alpha into a larger beta for the individual and the society.  But we must not forget about the simpler “beings”.  It sounds like such a dangerous implication, but the incredible waves of unintended consequences tell us to curb our confidence (not enthusiasm! (I’m not making a political argument, just acknowledging the trade off)).  Growth is important, but so is fairness and stability.  The most finely tuned system will result in the fastest growth, which will result in more optimal allocation of resources and in turn faster growth.  Capitalism is about to go 2.0.  The phase shift will hopefully eclipse our current debts through an improvement of quality of life thus wealth, whether earned through wages or investments.  This also explains why one cannot simply impose one or two aspects of a complex system on a simpler one and expect to always succed.  Yes free markets are necessary, but they are not sufficient.

Religion

Aided intelligence is why Neo went inside the Matrix.  We either simply choose to get off the data mining rollercoaster at one point or another or are eliminated by evolution.  The choice to get on was made eons ago and by a much simpler entity in a less complex world.  Whether you think God kicked off the race is irrelevant to the participant.  If you wanna believe, believe.  Religion itself is evolution/emergence, but please don’t burn me on a cross for this, cause I couldn’t care less.  However we have to be incredibly careful with certain aspects of our policies, because even if God may have created this mess, we surely can end all life as we know it with or without his assistance.  If you teach a man to learn, he shall become self aware.

It is also an inevitable thought, that we are less complex than other humans.  Although the dimensions and importance of such implications are not negative.  The net present value of future pleasure is positive or at least we perceive it to be so, by not committing suicide.  Thus the meaning of life remains intact.  However in a country of blind, one eyed man is either king or dead.  Choose your pond wisely.

Still think that the tree ends on Homo Sapien?  We definitely created this matrix.  How do you get in?

“Spoon boy: Do not try and bend the spoon. That’s impossible. Instead… only try to realize the truth.
Neo: What truth?
Spoon boy: There is no spoon.
Neo: There is no spoon?
Spoon boy: Then you’ll see, that it is not the spoon that bends, it is only yourself.”

Related posts:

1. Truthocracy – Part IV – www.hunch.com
2. Truthocracy – Part III – MIT Center for Collective Intelligence
3. Global Warming

Suppose you meet a Wise being (W) who tells you it has put $1,000 in box A, and either $1 million or nothing in box B. This being tells you to either take the contents of box B only, or to take the contents of both A and B. Suppose further that the being had put the $1 million in box B only if a prediction algorithm designed by the being had said that you would take only B. If the algorithm had predicted you would take both boxes, then the being put nothing in box B.  Presume that due to determinism, there exists a perfectly accurate prediction algorithm. Assuming W uses that algorithm, what choice should you make?

Ultimately one is lead to understand that the paradox is a manifestation of different interpretations of the problem definition (aren’t all paradoxes though?)  If you interpret the setup one way, then you should choose just B and you will net $1M.  If another way, then you should choose both and net either $1000 or $1,001,000 depending on W’s unknowable prediction.  As the authors conclude:

Newcomb’s paradox takes two incompatible interpretations of a question, with two different answers, and makes it seem as though they are the same interpretation. The lesson of Newcomb’s paradox is just the ancient verity that one must carefully define all one’s terms.

The authors suggest combining Bayesian nets with game theory is what yields this resolution.  And at first I thought they missed the obvious further conclusion from Bayes, which is that you should clearly choose just B.  Here was my reasoning.  The key clue is in this piece of information: “people seem to divide almost evenly on the problem”.  I.e. your Bayesian priors should now be set to 50% on either interpretation.  Now, we know that the expected value (EV) of the “just B” scenario is $1M, but we don’t really know what the EV is for the “both boxes” scenario in which “your choice occurs after W has already made its prediction”:

…if W predicted you would take A along with B, then taking both gives you $1,000 rather than nothing. If instead W predicted you would take only B, then taking both boxes yields $1,001,000….

Since in this scenario you are choosing after W’s prediction, is there any way you can “predict” what W’s choice might be?  No, of course not, it’s a variant of the Liar’s Paradox where if you predict one thing, the answer is the other.  Thus, if we are using a probabilistic approach (as the authors have laid out for us), we must conclude there is no information to be gleaned on W’s prediction and we are forced to assign 50% likelihood of either choice.  Hence, the EV of the “both boxes” interpretation is $501,000.

Putting both meta-Bayesian analyses together, we can conclude that since the “just B” interpretation yields $1M and the “both boxes” interpretation yield’s an EV of a little over half that, it’s a no-brainer to choose just B.  Which means your EV is exactly $500,000.  But wait!  We just concluded that the EV for “both boxes” is $501,000, which is clearly better!!!

Newcomb’s paradox will probably crack my list of Top 10 Paradoxes of All-Time (unless I figure out how to solve it after it does).

Related posts:

1. Parrondo's Paradox and Poker
2. Going Meta on "Autonomy"
3. Shermer on Science

Ciarán Brewster: Peer-reviewed studies that have looked at the possible relationship between vaccines and autism: http://bit.ly/BOIcw

Rafe Furst: Peer-reviewed autism studies can produce bad science too http://tinyurl.com/d9dpde

CB: If peer review is such a bad system, I’d love to know what alternative you suggest. Please enlighten me.

RF: Peer review=echo chamber http://is.gd/wnlb we can do better http://is.gd/wnl8 http://is.gd/wnl9 http://is.gd/wnla

CB: Hanson doesn’t address how we’re supposed to validate results, especially in a system where researchers are driven by money.

RF: you could use something like ideas futures or truthmarkets http://tinyurl.com/dchxlo

CB: It seems that truthmarkets make the big assumption that we have a way to evaluate the likely validity of a claim

CB:  What’s to stop a group of scientists, driven by money, propagating a lie, since the patron has no access to relevant info?

RF: markets r open 2 every1 so there is incentive 4 any1 with more truthful info 2 make a buck. Suspect fraud? Redo expmt & bet on it

CB: Redo expmt & bet on it. But this still doesn’t solve how we determine the validity of the suspected or new claim. Who decides?

RF: the market decides; it’s  consensus just as with all “truths” but with their money on the line people are more accurate/honest

CB: So it’s just money driven peer-review then. You seem to imply that scientists are dishonest unless there’s money on the line.

RF: 1. Thousands of peers betting beats 5 with inherent COI 2. Humans r better predictors & assesors of truth when own money on line

CB: “1000’s of peers betting.” I’m sorry, but what universe are you living? People will do and say anything if price is high enough.

RF: “People will do & say anything if price is high enough”.  And other people will sell, driving price down & make a profit off them

RF: 2 understand info markets http://is.gd/wGhu now see real money version http://is.gd/Kej markets r proven > human peers

CB: Could you please give me some examples of testable scientific hypotheses using the model of info markets?

RF: markets can’t set up experiments, test hypotheses, or get results;  they can provide incentive for humans to do it very well

CB: If info markets are the ultimate arbiter, how do they decide what is valid? How do they have knowledge of quality science?

Related posts:

1. Prediction Markets for Valuing Private Companies
2. Predicting the 2008 Presidential Election
3. Michael Martin does Soros

Now, those who make this objection usually don’t state it that bluntly. They might say that investors need technical expertise to evaluate the feasibility of a technology, or industry expertise to evaluate the likelihood of demand materializing, or business expertise to evaluate the evaluate the plausibility of the revenue model. But whatever the detailed form of the assertion, it is predicated upon angels possessing specialized knowledge that allows them to reliably predict the future success of seed-stage companies in which they invest.

It should be no surprise to readers that I find this assertion hard to defend. Given the difficulty in principle of predicting the future state of a complex system given its initial state, one should produce very strong evidence to make such a claim and I haven’t seen any from proponents of angels’ abilities. Moreover, the general evidence of human’s ability to predict these sorts of outcomes makes it unlikely for a person to have a significant degree of forecasting skill in this area.

First, there are simply too many random variables. Remember, startups at this stage typically don’t have a finished product, significant customers, or even a well-defined market. It’s not a stable institution by any means. Unless a lot of things go right, it will fall apart. Consider just a few of the major hurdles a seed-stage startup must clear to succeed.

1. The team has to be able to work together effectively under difficult conditions for a long period of time. No insurmountable personality conflicts. No major divergences in vision. No adverse life events.
2. The fundamental idea has to work in the future technology ecology. No insurmountable technical barriers. No other startups with obviously superior approaches. No shifts in the landscape that undermine the infrastructure upon which it relies.
3. The first wave of employees must execute the initial plan. They must have the technical skills to follow developments in the technical ecology. They must avoid destructive interpersonal conflicts. They must have the right contacts to reach potential early adopters.
4. Demand must materialize. Early adopters in the near term must be willing to take a risk on an unproven solution. Broader customers in the mid-term must get enough benefit to overcome their tendency towards inaction. A repeatable sales model must emerge.
5. Expansion must occur. The company must close future rounds of funding. The professional executive team must work together effectively. Operations must scale up reasonably smoothly.

As you can see, I listed three example of minor hurdles associated with each major hurdle. This fan out would expand to 5-10 if I made a serious attempt at exhaustive lists. Then there are at least a dozen or so events associated with each minor hurdle, e.g., identifying and closing an individual hire. Moreover, most micro events occur repeatedly. Compound all the instances together and you have an unstable system bombarded by thousands of random events.

Enter Nassim Taleb.  In Chapter 11 of The Black Swan, he summarizes a famous calculation by mathematician Michael Berry: to predict the 56th impact among a set of billiard balls on a pool table, you need to take into account the the position of every single elementary particle in the universe.  Now, the people in a startup have substantially more degrees of freedom than billiard balls on a pool table and, as my list above illustrates, they participate in vastly more than 56 interactions over the early life of a startup. I think it’s clear that there is too much uncertainty to make reliable predictions based on knowledge of a seed-stage startup’s current state.

“Wait!” you may be thinking, “Perhaps there are some higher level statistical patterns that angels can detect through experience.” True. Of course, I’ve poured over the academic literature and haven’t found any predictive models, let alone seen a real live angel use  one to evaluate a seed stage startup. “Not so fast! ” you say, “What if they are intuitively identifying the underlying patterns?” I suppose it’s possible.  But most angels don’t make enough investments to get a representative sample (1 per year on average).  Moreover, none of them that I know systematically track the startups they don’t invest in to see if their decision making is biased towards false negatives. Even if there were a few angels who cleared the hundred mark and made a reasonable effort to keep track of successful companies they passed on, I’d still be leery.

You see, there’s actually been a lot of research on just how bad human brains are at identifying and applying statistical patterns. Hastie and Dawes summarize the state of knowledge quite well in Sections 3.2-3.6 of Rational Choice in an Uncertain World. In over a hundred comparisons of human judgment to simple statistical models, humans have never won.  Moreover, Dawes went one better. He actually generated random linear models that beat humans in all the subject areas he tried. No statistical mojo to determine optimal weights. Just fed in a priori reasonable predictor variables and a random guess at what their weights should be.

Without some sort of hard data amenable to objective analysis, subjective human judgment just isn’t very good. And at the seed stage, there is no hard data. The evidence seems clear. You are better off making a simple list of pluses and minuses than relying on a “gut feel”.

The final line of defense I commonly encounter from people who think personal evaluations are important in making seed investments goes something like, “Angels don’t predict the success of the company, they evaluate the quality of the people. Good people will respond to uncertainty better and that’s why the personal touch yields better results.” Sorry, but again, the evidence is against it.

This statement is equivalent to saying that angels can tell how good a person will be at the job of being an entrepreneur. As it turns out, there is a mountain of evidence that unstructured interviews have little value in predicting job performance. See for example, “The Validity and Utility of Selection Methods in Personnel Psychology: Practical and Theoretical Implications of 85 Years of Research Findings“. Once you have enough data to determine how smart someone is, performance on an unstructured interview explains very little additional variance in job performance. I would argue this finding is especially true for entrepreneurs where the job tasks aren’t clearly defined. Moreover, given that there are so many other random factors involved in startup success than how good a job the founders do, I think it’s hard to justify making interviews the limiting factor in how many investments you can make.

Why then are some people so insistent that personal evaluation is important?  Could we be missing something? Always a possibility, but I think the explanation here is simply the illusion of control fallacy. People think they can control random events like coin flips and dice rolls. Lest you think this is merely a laboratory curiosity, check out the abstract from this Fenton-O’Creev, et al study of financial traders. The higher their illusion of control scores, the lower their returns.

I’m always open to new evidence that angels have forecasting skill. But given the overwhelming general evidence against the possibility, it better be specific and conclusive.

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2. Revolutionizing Angel Funding
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