I took a few business courses at Stanford. They were pretty entertaining and my favorite was a course on Supply-Chain Management. It was a series of case-studies that all started or ended with: “Rob looked out of his office window overlooking the hills in Palo Alto and wondered how he was going to …”
Invariably, the […]
I am making some more progress with the entropy angle. But there is enormous confusion in terminology and fundamental concepts when it comes to entropy.
In various journal papers, “entropy” has been taken to mean information, randomness, disorder, uncertainty, increased order. In others, it is “negentropy” that takes these meanings.
A note on the NIH […]
One of the pillars of the scientific method is repeatability. It should be possible for an experiment performed in one lab under certain parameters to be repeated under exactly the same conditions in any other lab.
Part of this requires at least some parameters that are controlled and easy manipulated by the scientist. From wikipedia on […]
I have written about the role of competition and salience before. I argued that the presence of stiff competition can mean that the option is at least priced correctly, if not overpriced. It’s a matter of looking at how skewed the demand-supply distribution is. If demand is much higher than supply (stiff competition), it’s highly […]
My latest essay goes deeper into the connection between entropy, information, and kurtosis.
I discuss the behavior of kurtosis and entropy in unconstrained probability distributions and investigate the behavior of sample kurtosis in time-series with non-decreasing kurtosis.
The essay: Distributional Entropy, Information, and Fat-Tails.
I will discuss how infinite kurtosis is manifested in the real world […]
I varied the tail-exponent of a Student’s-T distribution, taking it from a near-gaussian distribution to a near-cauchy, fat-tailed distribution and noted the relationship between kurtosis and information entropy. Here’s the plot:
The implications are interesting. More on that later.
The Mercury News is reporting a new study by the US Geological Survey that predicts “California faces a 99.7 percent chance of big quake by 2037.”
How the notion of “probability” is interpreted in these studies is a mystery. The power-law tails on these processes have a very low exponent and the ability to calibrate the […]
We cannot learn from history in complex systems, except at the meta level (we can learn that we cannot learn, for example). This follows once one accepts that causality is impossible to pin down given an observation of a phenomenon.
Ericsson et al show that learning, and becoming an expert, requires:
A tight relationship between action […]
Ever notice that even in pretty large groups a sudden hush can fall as everyone stops talking at the same time? I’ve noticed this in large classrooms filled with boisterous kids to formal dinners with great conversationalists.
When it does occur, the group usually just looks around, smiles, and moves on. The din of chatter […]
I’ve written before on the topic of stability and robustness to sudden shocks. In mathematical terms, any attempt to squeeze the second moment (volatility) of the distribution will push mass into the tails and drastically increase the fourth moment (kurtosis)
You can see above that the probability distributions with fatter tails have “thinner” bodies. While sampling […]
