Behavioral Bias
The tendency to judge the quality of a decision based on its result rather than the reasoning process.
What is Outcome Bias?
In these markets, a contract price of 60 cents implies this percentage probability of an event occurring.
What is 60%?
The 1906 experiment where the average guess of 800 villagers for an ox's weight was remarkably accurate.
What is Francis Galton’s Ox Experiment?
A diagram that maps possible choices and their potential outcomes, used to visualize and calculate expected values.
What is a Decision Tree?
This describes an organization's aspirations.
What is vision?
The tendency to rely too heavily on the first piece of information offered, like an initial price or norm
What is Anchoring?
A trader who puts up an offer and waits for someone else to accept it, thereby providing liquidity.
What is a Market Maker?
A failure mode of crowds where individuals imitate others' decisions rather than relying on their own information.
What is Herding (or an Information Cascade)?
According to Hofstede, this is the degree to which members of a society accept differences in power and authority.
What is power distance?
This describes an organization's strategic purpose for operating.
What is mission?
A preference for the current situation over change, even when change has a higher expected value.
What is Status Quo Bias?
This US federal agency is the regulator for licensed prediction markets like Kalshi.
What is the CFTC (Commodity Futures Trading Commission)?
This Austrian economist argued in 1945 that dispersed, local knowledge is more powerful than centralized planning.
Who is Friedrich Hayek?
This interpersonal role involves a manager counseling, communicating, and directing subordinates.
What is a leader?
The 3 Ps of the Triple Bottom Line.
What are Profit, People and Planet?
A core concept of Prospect Theory, it's the tendency to fear losses more than we value equivalent gains.
What is Loss Aversion?
This algorithm, like the LMSR, solves the "liquidity bootstrap problem" by continuously posting buy and sell offers, even when traders are rare.
What is an Automated Market Maker (AMM)?
The weighted average of all possible outcomes, calculated as the sum of each outcome’s value multiplied by its probability.
What is Expected Value (EV)?
This person intentionally takes on the role of critic.
Who is the devil’s advocate?
These skills involve the ability to work with people and understand employee motivation.
Who are first-line managers?
Herbert Simon's concept that people choose the first "good enough" option rather than searching for the absolute best one.
What is Satisficing?
The winner of this prize was recently leaked early by a prediction market.
What is the Nobel Peace Prize.
The study of strategic interaction where the outcome depends on the actions of multiple decision-makers.
What is Game Theory?
Choosing not to voice concerns to keep the peace.
What is groupthink?