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• Survivorship Bias
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Risks to civilization, humans, and planet Earth
1 Despite the importance of existential risks, it is a difficult subject to study directly since humanity has never been destroyed before; while this
does not mean that it will not be in the future, it does make modelling
existential risks difficult, due in part to survivorship bias.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Equity premium puzzle - Denial of equity premium
1 *Survivorship bias of exchanges: exchanges often go bust (just as
governments default; for example, Shanghai stock exchange during
1949 communist takeover), and this risk needs to be included – using only exchanges which have survived for the long-term overstates returns. Exchanges close often enough for
this effect to matter.https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Risks to civilization, humans and planet Earth
1 Human extinction is a difficult subject to study directly since humanity has never been destroyed before; while
this does not mean that it will not be in the future, it does make modelling existential risks difficult, due in part
to survivorship bias.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Hedge funds - Non-investable indices
1 The short lifetimes of many hedge funds means that there are many new entrants and many departures each year, which
raises the problem of Attrition bias|survivorship bias. If we examine only funds that have survived to the present, we will
overestimate past returns because many of the worst-performing funds have not
survived, and the observed association between fund youth and fund performance suggests that this bias may be substantial.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Private equity - Private equity fund performance
1 This analysis may actually overstate the returns because it relies on
voluntarily reported data and hence suffers from survivorship bias (i.e
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Online participation - Participation in the social web
1 Often, feedbacks, opinions and editorials are posted from those users who have stronger feelings
towards the matter than most others; thus it is often the case that some
posts online are not in fact representative of the entire
population leading to what is call the Survivorship bias
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Rags to riches - Criticism
1 The concept of Rags to riches has been criticised by social reform movement|
reformers, revolutionaries, essayists and statisticians, who argue that only a
handful of exceptionally capable and/or mainly Luck|lucky persons are actually able to travel the rags to riches road,
being the great publicity given to such cases a natural Survivorship bias
illusion,Taleb, 2001
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Jensen's alpha - History
1 Since Eugene Fama, many academics believe financial markets are too Efficient-
market hypothesis|efficient to allow for repeatedly earning positive Alpha, unless
by chance. To the contrary, empirical studies of mutual funds spearheaded by Russ Wermers usually confirm managers'
stock-picking talent, finding positive Alpha, however this work has been criticized.
Among the criticisms is survivorship bias.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Fooled by Randomness - Thesis
1 * Survivorship bias. We see the winners and try to learn from them, while forgetting the huge number of
losers.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias
1 'Survivorship bias', or 'survival bias', is the logical error of concentrating on the
people or things that survived some process and inadvertently overlooking those that did not because of their lack of visibility. This can lead to false conclusions in several different
ways. The survivors may be actual people, as in a medical study, or could be companies or research subjects or applicants for a job, or
anything that must make it past some selection process to be considered further.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias
1 Survivorship bias can lead to overly optimistic beliefs because failures
are ignored, such as when companies that no longer exist are excluded
from analyses of financial performance
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias
1 Survivorship bias is a type of selection bias.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - In finance
1 In finance, survivorship bias is the tendency for failed companies to be excluded from performance studies
because they no longer exist
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - In finance
1 In this paper the researchers eliminate survivorship bias by
following the returns on all funds extant at the end of 1976
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - In finance
1 To use the current 500 members only and create a historical equity
line of the total return of the companies that met the criteria,
would be adding survivorship bias to the results
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - In finance
1 Financial writer Nassim Taleb called the survivorship bias silent evidence
in his book The Black Swan.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - In the military
1 During World War II, the statistician Abraham Wald took survivorship bias
into his calculations when considering how to minimize bomber
losses to enemy fire
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - In cats
1 Another possible explanation for this phenomenon would be survivorship bias. The fact that cats who die in
falls are less likely to be brought to a veterinarian than injured cats, and thus many of the cats killed in falls
from higher buildings are not reported in studies of the subject.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - As a general experimental flaw
1 Survivorship bias (or survivor bias) is a statistical artifact (error)|artifact in applications outside finance, where studies on the remaining population are fallaciously compared with the
historic average despite the survivors having unusual properties.
Mostly, the unusual property in question is a track record of success
(like the successful funds).https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - As a general experimental flaw
1 A major criticism which surfaced against his calculations was the possibility of unconscious survivorship bias in subject selections. He was
accused of failing to take into account the large effective size of his sample (all the people he
rejected as not being strong telepaths because they failed at an earlier testing stage). Had he done this he might have seen that, from the large sample, one or two individuals would
probably achieve the track record of success he had found purely by chance.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - As a general experimental flaw
1 Survivorship bias is one of the issues discussed in the provocative 2005
paper Why Most Published Research Findings Are False.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Survivorship bias - In business law
1 Survivorship bias can raise Truth in advertising|truth-in-advertising problems when the success rate advertised for a
product or service is measured with respect to a population whose makeup differs from that of the target audience
whom the company offering that product or service targets with advertising claiming that success rate. These problems become
especially significant when
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
Global catastrophic risks
1 Researchers experience difficulty in studying human extinction directly,
since humanity has never been destroyed before. While this does not mean that it will not be in the future,
it does make modelling existential risks difficult, due in part to
survivorship bias.
https://store.theartofservice.com/the-survivorship-bias-toolkit.html
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• https://store.theartofservice.com/the-survivorship-bias-toolkit.html
The Art of Servicehttps://store.theartofservice.com