If you've ever attended a so called higher education
course - Decision Making is one of the subjects they teach you.
Apparently all models need some entry parameters and
in finance it is the so called rational investor. Please note it is
referred to as rational not greedy.
If you wanna read a good book about Decision Making
pick Daniel Kahneman's "Thinking, Fast and Slow".
I like the chapter (17) when he explains mean
regression and bridges to correlation.
I can not relate to the examples provided earlier in
his book I believe they are by now outdated especially when he refers
to work of the 70s also there is a bias towards US stereotypes.
But the chapter mentioned above is worth reading the
book.
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