Book Reports

Book Report: The Hot Hand

The Big Idea

Ben Cohen investigates the mystery and science of streaks, from basketball to business. Steph Curry, Shakespeare, Daniel Kahneman, and David Booth all covered extensively


Favorite Quote

“I’d compare stock-pickers to astrologers,” Fama liked to say. “But I don’t want to bad-mouth the astrologers.”     

Recommendation

8.5/10: Well-written with a ton of fun anecdotes. A great beach read


Book Notes

“If I know your best work, I know when your second best will be and when your third best will be,” Wang says. “That’s your hot-hand period.” But it’s not linear. It’s jagged.

“Our brain is an excellent pattern-matching device,” Zafar said. “It will find patterns where there aren’t any.”               
“Carefully selecting faculty in carefully selected fields.” 

The younger Terman was tasked with bolstering Stanford’s academic offerings, and he built the school’s reputation atop what he called “steeples of excellence.”         

People expected sequences that were random in the long run to be random in the short run, too. But they’re not. And maybe the most remarkable thing about this was that experts were more susceptible to the bias than anybody.               

“The most competitive person I’ve watched on TV is Michael Jordan,” Booth says. “But the most competitive person I’ve ever been around is Gene Fama.”

When I asked him why, he peered over his glasses. He proceeded to look at me like I had nine eyes. “The notion of market efficiency has to be one of the most unpopular ideas on Wall Street ever.”   

           
“My comparative advantage was not in thinking up the next great idea. My comparative advantage was implementing the next great idea.”               


“I’d compare stock-pickers to astrologers,” Fama liked to say. “But I don’t want to bad-mouth the astrologers.”

               
It should go without saying by now that, for the most part, David Booth doesn’t carry himself like a financial celebrity, nor was he treated as one for most of his career. He works from nine a.m. to five p.m. He goes home when he gets tired. He tried sitting on an exercise ball in the office but it made his lower back hurt, and he went back to a plain old swivel chair. He doesn’t own a sports team. He’s not building spaceships. He’s as close to anonymous as a billionaire can get, which is oddly fitting, given that he amassed his fortune by constantly reminding himself to ignore his ego.               


If the last two pitches were called strikes by the umpire, he was 2.1 percentage points less likely to call a strike.               


“If you have faith, evidence doesn’t matter.”               


And they found that judges were less likely to grant asylum immediately after they granted asylum in their last case. That is crushing.             

 
“The conviction here at home that we are better than anyone else needs to be shaken,” he wrote in a letter to his grandson, later adding, “A trailblazer discovers the good to be found out there among the foreigners.”               
Wallenberg had been right about himself all those years ago. He did have the potential to do something more than say no to people.         

     
It seems impossible that one person could have pulled any of this off in a lifetime. Wallenberg did all this in a few months. He saved approximately one hundred thousand human lives with the power of his imagination.               


He wasn’t allowed to watch television at home when he was a child, but there was always one exception to this rule: sports. He watched a lot of sports.     

         
The shocking conclusion that there was such a thing as a hot hand. It amounted to a 1.2 percent improvement for players who made one of their past four shots and a 2.4 percent improvement when they made two of those shots—a small but nonetheless significant effect. That is, if a player made a few shots in a row, he wasn’t less likely or the same amount of likely to make his next shot, at least not once you factored in the probability of making harder shots. He was slightly more likely. He was heating up. Then he was on fire.           

   
“My take on all these people is they just can’t handle reality,” he says.               
“When we see holes in our theories, or contradictions, or anomalies, we should be bothered by these things rather than trying to explain them away,” he says. That capacity for discomfort is the mark of an honest scientist.               


It fit into his grand unified theory of how academics viewed their place in the world. “Everyone is dumb, and we should poke fun at them,” he says. “One of the ways you can always make a living as an academic is to write papers about how stupid regular people are.”   

           
“I think clearly Tversky et al. were wrong,” Kahneman said. “Their test was biased, and there is a hot hand. “It was an unfortunate thing they went on to make that mistake,” he continued. “But the point is still valid. People see patterns where there are none.

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