TRUTH of modeling

from [Norman Hovda (990929.1210 MST)]

From [ Marc Abrams (990929.1400) ]

Sorry folks. Rick followed up that post with another to clarify one of his

Really outstanding Rick. _Nice_ work.


Date: Fri, 19 Oct 90 08:38:31 -0700
From: Rick Marken
ID#: RM9010080838B
Thread: Testability of Models and Science


So that is why I think your point about the TRUTH of modeling
is so important. Our own theory predicts that it should be difficult to do
what you correctly said that a scientist must do -- be willing to abandon
ideas based on evidence. I can tell you that I know from my own personal
experience how difficult it is to operate according to this principle. I
have often had cherished models of the way certain behavioral processes
SHOULD work. It was not easy to abandon those models in the face of
evidence -- there was even the temptation to fudge the evidence (I never
did it but, still, I can understand, sort of, those who do -- it ain't
right but it is predicted by control theory).

Hasta Luego

Rick M

Xlent and thanks. (BTW Rick, I just finished your Blind Men and the
Elephant piece. Very helpful.)

I don't know about the "TRUTH" of anything. For me it is more utilitarian,
a level of accuracy and reliability over time that promotes a sense of
positive expectation. For example, when a trader gets out of step with
the mkt bias, locked into reference level "evidence" informed by expert
opinion, forecasts, models or POV, being reminded of "Does one want
to be 'right' or make money?" usually serves financial survival quite well.
At that moment, if the trader is able to respond to the aphorism's
wisdom, realizing that the situation as it is is "hopeless but not serious"
if s/he changes, survival is achieved.

IOW, my experience would say that it is possible to change one's
reference level for $$$ v. rightness; a simple choice. Granted, for those
mired in conceptual confusions of so-called "moral" certitude, principle
and conviction or other cognitive distortions, it's more difficult to let go
and adapt. For those new traders without the willingness or capability to
lose their reference level(s) for _needing_ "to be right", they don't last
long (financially dying before reorganization ever gets a chance to start).