Rock Breaks Scissors: A Practical Guide To Outguessing And Outwitting Almost Everybody
Much of this book deals with how to outguess systems. There is a discrepancy between real randomness and how people perceive randomness. People also have the reverse problem of seeing patterns were there aren’t any. By knowing this and a little math you can game some systems. Not necessarily win, but increase your odds of winning. William Poundstone illustrates these human shortcomings with games like Rock Paper Scissor and then works his way through Lotteries, Multiple Choice tests, Card Games, Sports, Pricing, Real Estate, and even the stock market. Poundstone’s writing is clear and easy to follow along even when describing the science that uncovered these human shortcomings.
In Poundstone’s book we are giving mental tools and also some computer tools:
Binomial Distribution Function in Excel Spreadsheets: “How to Outguess Manipulated Numbers”
Benford’s Law analysis
Tom Adams’s Poologic.com “How to Outguess Basketball Bracket Pools”
Price Tracking App or Site like Decide.com “How to Outguess Retail Prices”
I personally have used camelcamelcamel.com to track H&R Block Tax software on Amazon.com
PE Momentum System “How to Outguess the Stock Market”
The Robert Shiller system of buying when market PE (last 10 years earnings) falls to some low threshold (15) and selling when it rises to some high threshold (24). Add in this rule to take advantage of Momentum: Check the Shiller PE every month or quarter. Make no buy or sell unless the PE has moved more than 6% from it’s previous mark.
“All of this book’s applications are founded on one simple idea. When people make arbitrary, random or strategic choices, they fall into unconscious patterns that you can predict.” By predict, Poundstone means gain a slight edge.