• Choose a category
• All
• Classic-Fiction

By Root 991 0

defined by the envelope will have been replaced by a single, certain price at each time, just like prices that we can currently see in the past. And knowing this, it’s tempting to take the next step of assuming that this future trajectory has in some cosmic sense already been determined, even if it has not yet been revealed to us. But this last step would be a mistake. Until it is actually realized, all we can say about the future stock price is that it has a certain probability of being within a certain range—not because it actually lies somewhere in this range and we’re just not sure where it is, but in the stronger sense that it only exists at all as a range of probabilities. Put another way, there is a difference between being uncertain about the future and the future itself being uncertain. The former is really just a lack of information—something we don’t know—whereas the latter implies that the information is, in principle, unknowable. The former is the orderly universe of Laplace’s demon, where if we just try hard enough, if we’re just smart enough, we can predict the future. The latter is an essentially random world, where the best we can ever hope for is to express our predictions of various outcomes as probabilities.

Past Versus Future Stock Price

PREDICTING WHAT TO PREDICT

The distinction between predicting outcomes and predicting probabilities of outcomes is a fundamental one that should change our view about what kinds of predictions we can make. But there is another problem that also arises from the way we learn from the past, which is if anything even more counterintuitive—namely that we can’t know which outcomes we ought to be making predictions about in the first place. Truth be told, there is an infinitude of predictions that we could make at any given time, just as there is an infinitude of “things that happened” in the past. And just as we don’t care at all about almost all of these past events, we don’t care about almost all such potential predictions. Rather, what we care about is the very small number of predictions that, had we been able to make them correctly, might have changed things in a way that actually mattered. Had U.S. aviation officials predicted that terrorists armed with box cutters would hijack planes with the intention of flying them into the World Trade Center and the Pentagon, they could have taken preventative measures, such as strengthening cockpit doors and clamping down on airport screening, that would have averted such a threat. Likewise, had an investor known in the late 1990s that a small startup company called Google would one day grow into an Internet behemoth, she could have made a fortune investing in it.

Looking back in history, it seems we ought to have been able to predict events like these. But what we don’t appreciate is that hindsight tells us more than the outcomes of the predictions that we could have made in the past. It also reveals what predictions we should have been making. In November of 1963, how would one have known that it was important to worry about snipers, and not food poisoning, during JFK’s visit to Dallas? How was one to know before 9/11 that the strength of cockpit doors, not the absence of bomb-sniffing dogs, was the key to preventing airplane hijackings? Or that hijacked aircraft, and not dirty bombs or nerve gas in the subway, were the main terrorist threat to the United States? How was one to know that search engines would make money from advertising and not some other business model? Or that one should even be interested in the monetization of search engines rather than content sites or e-commerce sites, or something else entirely?

In effect, this problem is the flip side of Danto’s argument about history in the previous chapter—that what is relevant cannot be known until later. The kinds of predictions we most want to make, that is, require us to first determine which of all the things that might happen in the future will turn out to be relevant, in order that we can start paying attention to them now. It seems we ought to be able