“New Learning” Barnard’s Inn Hall Holborn London EC1N 2HH Tel: +44 (0) Fax: +44 (0) © Gresham College 2008 Mercers’ School Memorial Professor of Commerce Michael Mainelli Regulating The Above Average: Luck or Skill?
© Gresham College 2008 Outline Woe begone days Control structures Skill or luck? Good or bad? Regulating the excellent Popularity measures “Get a detailed grip on the big picture.” Chao Kli Ning
© Gresham College 2008 Woe Begone Days
© Gresham College 2008 Above Average Lecter(er)
© Gresham College 2008 Inconceivable!
© Gresham College 2008 Luck Or Skill? [Source:
© Gresham College 2008 Long-Term Application Of Skill [Source:
© Gresham College 2008 Skill Or Luck? Heads/ObverseTails/Reverse
© Gresham College 2008 Flip!
© Gresham College 2008 Chance Would Be A Fine Thing FlipChanceCumulativeOdds, 1:x 1H/O T/R H/O H/O T/R H/O H/O T/R H/O T/R
© Gresham College 2008 Dumb Luck
© Gresham College Long Years [Source: ¿?
© Gresham College 2008 Good Or Bad? (1) George Fabio
© Gresham College 2008 Good Or Bad? (2) George Fabio R2 = R 2 =0.0026
© Gresham College 2008 Good Or Bad? (3) George Fabio
© Gresham College 2008 Finding Faults Commission over omission Losses over gains Present over future
© Gresham College 2008 Predicting The Above Average Disinformation Chance Skill Complex Simple High Low Gambler ProfessionalScientist Measurable Information
© Gresham College 2008 Competing Towards Excellence
© Gresham College 2008 Enforced Regulation Disinformation Enforcement Regulation High Low High Low Confused CumbersomeIneffective Desirable Information
© Gresham College 2008 Regulating The Above Average Appeal to professional or scientific virtue Use control systems Pin down predictions Promote competition… but avoid measuring popularity in place of performance
© Gresham College 2008 Discussion 1. Managing skill. 2. Managing luck. [Source:
© Gresham College 2008 Regulating The Above Average: Luck Or Skill? Thank you! “Get a big picture grip on the details.” Chao Kli Ning