# Iowa Gambling Task



## Gringotts Bank (28 March 2016)

Hunches are more powerful/accurate than conscious decision making.

That doesn't mean that your hunches will necessarily be accurate; just that they will be *more *accurate on average than choices made consciously.  

How many of us traders have entered a discretionary trade knowing _on some level_ it was going to reverse on us?  Common, right?  

https://en.wikipedia.org/wiki/Iowa_gambling_task

Someone very in tune with his hunches is billionaire speculator George Soros.  And according to his son, George himself is completely unaware of the process.  

To become that good at speculating, one needs to be free of a whole host of potential fears, eg. fear of failure, fear of success, fear of being wrong, etc.


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## fraa (28 March 2016)

Read khanemans book "Thinking fast and thinking slow" For the other side of this coin



Gringotts Bank said:


> Hunches are more powerful/accurate than conscious decision making.
> 
> That doesn't mean that your hunches will necessarily be accurate; just that they will be *more *accurate on average than choices made consciously.
> 
> ...


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## Gringotts Bank (28 March 2016)

fraa said:


> Read khanemans book "Thinking fast and thinking slow" For the other side of this coin




I started a while back, expecting to like it, but got bored!  Can you give me the gist?


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## fraa (28 March 2016)

Man has 2 Modes, intuitive vs analytical

Intuitive is always on and takes least effort, works most times but due to its heuristic nature will fail on edge cases (Ie cognitive bias).

Analytical is tiring and susceptible to being misled by intuitive.

Hence those familiar with intuitive mode and its biases (Ie salesman and markets) can manipulate you, even if you are conscious of said bias. So either work around it (Ie as taleb recommends) Or predesign algorithms that u follow (Your black box system) To avoid bias.

Other side of the coin as khanman views costs of bias > Benefits of intuition on those edge cases. He does state this clearly in his book and clearly also explains the other school (Ie your post) Which states intuition is more powerful ( Intuition benefits > Bias cost).

I am sure I missed much but thats off top of my head.



Gringotts Bank said:


> I started a while back, expecting to like it, but got bored!  Can you give me the gist?


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## Gringotts Bank (29 March 2016)

fraa said:


> Man has 2 Modes, intuitive vs analytical
> 
> Intuitive is always on and takes least effort, works most times but due to its heuristic nature will fail on edge cases (Ie cognitive bias).
> 
> ...




Thanks.  Good stuff.


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## ggkfc (29 March 2016)

Gringotts Bank said:


> Hunches are more powerful/accurate than conscious decision making.
> 
> That doesn't mean that your hunches will necessarily be accurate; just that they will be *more *accurate on average than choices made consciously.
> 
> ...




tried it at the casino, just always the wrong colour


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## Gringotts Bank (29 March 2016)

I'd argue that anyone who has been around charts for a while would be able to look at say BHP and know what's going to happen in the next few days.  The problem would be the interfering and competing circuitry, both conscious and subconscious.   

This is an awesome paper:  http://www.pnas.org/content/106/13/5035.abstract


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