Behavioral Economics: The Errors Point the Same Way
If people departed randomly from rational choice, the departures would cancel out. They lean consistently in the same directions — which is what makes them worth studying, and worth worrying about.
Topic
Markets
Benford's Law: Why So Many Numbers Start With One
Around thirty per cent of numbers in real datasets begin with 1, and only five per cent with 9. People inventing figures don't reproduce that — which is how the pattern became an auditing tool.
The Central Limit Theorem: Why Bell Curves Are Everywhere
One die is flat. Ten dice added together make a bell curve. The shape is a property of adding independent things — which tells you exactly when to expect it and when not to.
The Law of Large Numbers: Small Samples Are Wild
Seven heads in ten flips is unremarkable; seventy thousand in a hundred thousand would be extraordinary. The same probability, different room for chance — with consequences most people miss.
Personal Finance: The Boring Part Is the Part That Works
Most attention goes to choosing investments — the part you control least and that matters least. Saving rate, time, and costs decide the outcome, and all three are dull.
Zero-Sum and Positive-Sum: Two Very Different Games
Two children share one cake and one child's gain is the other's loss. Two neighbours swap mangoes for apples and both end up better off, with no new fruit. Telling these apart changes what you should do.
The Pareto Principle: Your Effort and Your Results Are Not the Same Shape
A few pea pods produced most of Pareto's peas. The lopsidedness he kept finding everywhere contradicts a default we apply constantly — treating twenty tasks as twenty roughly equal things.
Opportunity Cost: The Free Ticket That Costs You an Evening
Money spent arrives with a bill. The alternative you silently rejected never does — which is why we count one half of every decision carefully and the other half not at all.
Bayes' Theorem: The 99% Accurate Test That Is Wrong 91% of the Time
A rare disease, a 99% accurate test, a positive result — and roughly a 9% chance you're ill. The gap comes from one number most people leave out entirely.
Economic Moats: Hard Work Is Not an Advantage
Two shops on one street do everything right; one closes. Quality and effort are what you need to compete at all — a moat is what stops a rival matching you even when they genuinely try.
Emergence: The Traffic Jam That Nobody Caused
You drive through a ten-minute jam and past no accident. The jam was real, it moved backwards down the road, and no car was it. A great deal of the world is built this way.
Antifragility: The Things That Get Better When You Drop Them
We label parcels 'fragile' but have no word for the opposite — not strong, which survives shocks unchanged, but something that improves because of them. Your muscles are the everyday example.
Loss Aversion: Why ₹1,000 Lost Hurts More Than ₹1,000 Gained
A fair coin flip for equal stakes feels like a bad bet to almost everyone. The asymmetry behind that instinct quietly governs pricing, negotiation, investing, and why reform is so hard.
Survivorship Bias: The Bullet Holes That Weren't There
Wartime analysts mapped damage on returning bombers and proposed armouring the places full of holes. A statistician pointed out those were the survivable hits — and inverted the entire dataset.
Compound Interest: The Pond Was Empty Until It Wasn't
A lily pad covering a pond on day thirty covered half of it on day twenty-nine. Nothing about its growth changed — only the base it grew from. Human intuition fails at this reliably and expensively.
Natural Selection: The Algorithm That Needs No Designer
Your eye has a blind spot no engineer would design. That flaw reveals the process that built it — a process that governs markets and ideas as strictly as it governs retinas.
Aggregation Theory: How Free Distribution Rewrote the Rules of Monopoly
A newspaper needed presses and trucks to control its market. An aggregator controls a bigger one with neither — because the internet moved the choke point from distribution to attention.
Feedback Loops: Why Structure Beats Effort Every Time
A shower with a four-second lag will defeat anyone. The oscillation is a property of the loop, not the person — and most organisational dysfunction works exactly the same way.
Black Swan Events: The Model Was Never the Problem
Every observed swan was white until Australia. No amount of confirming evidence establishes a universal rule — and the most confident moment is often the one just before the record breaks.
The Prisoner's Dilemma: When Two Rational People Both Lose
Betraying your partner is the correct choice no matter what they do. So both of you betray, and both of you serve five years instead of one. No error was made — and that is exactly the problem.
Nash Equilibrium: Why Everyone Stays Somewhere Nobody Likes
Two petrol stations cut prices until neither can move without losing. Nobody wanted the result, everyone behaved sensibly, and it held anyway — because stable and good are different properties.
The Map Is Not the Territory: Every Model Earns Its Keep by Lying
A map showing everything would be the size of the city and useless. Models work by discarding detail — the error is forgetting which detail, and when you left the range where it didn't matter.
Power Laws: When the Average Describes Nobody
The world's tallest person barely moves a room's average height. The world's wealthiest moves it by a factor of millions. Almost all statistical intuition is built for the first case.
Regression to the Mean: The Jinx That Is Just Arithmetic
Praise a great performance and the next is worse; criticise a bad one and the next improves. A flight instructor learned this lesson over years of observation — and it was never about motivation.
Margin of Safety: Building for the Estimate Being Wrong
A bridge expecting ten tonnes is built to hold fifty. The extra capacity will likely never be used — and it is not there for unusual lorries. It is there because the calculations might be wrong.
Business Models: What Would You Give Up to Earn More?
How the money arrives is the least interesting part. Every model has a lever for growing revenue and a cost attached to pulling it — and where that cost falls predicts behaviour under pressure.
Competition: Better at What, Exactly?
Two firms selling something interchangeable can only compete on price, and every improvement gets matched. The useful question is not how hard to compete but what you are competing on.
Venture Capital: The Maths Only Works With Outliers
Most investments return little; one or two return the entire fund. Every practice in the industry that looks strange from outside is a rational response to that distribution.
Markets: A Price Is a Bet, Not a Measurement
A company posts record profits and the share price falls. That stops looking irrational once you see that a price already contains what everyone expected — and moves only on the difference.