Gerd Gigerenzer - Collected Quotes

"A heuristic is ecologically rational to the degree that it is adapted to the structure of an environment. Thus, simple heuristics and environmental structure can both work hand in hand to provide a realistic alternative to the ideal of optimization, whether unbounded or constrained." (Gerd Gigerenzer & Peter M Todd, "Fast and Frugal Heuristics: The Adaptive Toolbox" [in "Simple Heuristics That Make Us Smart"], 1999)

"Fast and frugal heuristics employ a minimum of time, knowledge, and computation to make adaptive choices in real environments. They can be used to solve problems of sequential search through objects or options, as in satisficing. They can also be used to make choices between simultaneously available objects, where the search for information (in the form of cues, features, consequences, etc.) about the possible options must be limited, rather than the search for the options themselves. Fast and frugal heuristics limit their search of objects or information using easily computable stopping rules, and they make their choices with easily computable decision rules." (Gerd Gigerenzer & Peter M Todd, "Fast and Frugal Heuristics: The Adaptive Toolbox" [in "Simple Heuristics That Make Us Smart"], 1999)

"At present, high school education in some countries covers only little, if any, statistical thinking. Algebra, geometry, and calculus teach thinking in a world of certainty - not in the real world, which is uncertain. [...] Furthermore, in the medical and social sciences, data analysis is typically taught as a set of statistical rituals rather than a set of methods for statistical thinking." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"External representations are not just passive inputs to an active mind. They can do part of the reasoning or calculation, making relevant properties of the same information more accessible." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"Good numeric representation is a key to effective thinking that is not limited to understanding risks. Natural languages show the traces of various attempts at finding a proper representation of numbers. [...] The key role of representation in thinking is often downplayed because of an ideal of rationality that dictates that whenever two statements are mathematically or logically the same, representing them in different forms should not matter. Evidence that it does matter is regarded as a sign of human irrationality. This view ignores the fact that finding a good representation is an indispensable part of problem solving and that playing with different representations is a tool of creative thinking." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"Ignorance of relevant risks and miscommunication of those risks are two aspects of innumeracy. A third aspect of innumeracy concerns the problem of drawing incorrect inferences from statistics. This third type of innumeracy occurs when inferences go wrong because they are clouded by certain risk representations. Such clouded thinking becomes possible only once the risks have been communicated." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"In my view, the problem of innumeracy is not essentially 'inside' our minds as some have argued, allegedly because the innate architecture of our minds has not evolved to deal with uncertainties. Instead, I suggest that innumeracy can be traced to external representations of uncertainties that do not match our mind’s design - just as the breakdown of color constancy can be traced to artificial illumination. This argument applies to the two kinds of innumeracy that involve numbers: miscommunication of risks and clouded thinking. The treatment for these ills is to restore the external representation of uncertainties to a form that the human mind is adapted to." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"Information needs representation. The idea that it is possible to communicate information in a 'pure' form is fiction. Successful risk communication requires intuitively clear representations. Playing with representations can help us not only to understand numbers (describe phenomena) but also to draw conclusions from numbers (make inferences). There is no single best representation, because what is needed always depends on the minds that are doing the communicating." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"Natural frequencies facilitate inferences made on the basis of numerical information. The representation does part of the reasoning, taking care of the multiplication the mind would have to perform if given probabilities. In this sense, insight can come from outside the mind." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"Overcoming innumeracy is like completing a three-step program to statistical literacy. The first step is to defeat the illusion of certainty. The second step is to learn about the actual risks of relevant events and actions. The third step is to communicate the risks in an understandable way and to draw inferences without falling prey to clouded thinking. The general point is this: Innumeracy does not simply reside in our minds but in the representations of risk that we choose." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"Statistical innumeracy is the inability to think with numbers that represent uncertainties. Ignorance of risk, miscommunication of risk, and clouded thinking are forms of innumeracy. Like illiteracy, innumeracy is curable. Innumeracy is not simply a mental defect 'inside' an unfortunate mind, but is in part produced by inadequate 'outside' representations of numbers. Innumeracy can be cured from the outside." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"The creation of certainty seems to be a fundamental tendency of human minds. The perception of simple visual objects reflects this tendency. At an unconscious level, our perceptual systems automatically transform uncertainty into certainty, as depth ambiguities and depth illusions illustrate." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002) 

"The key role of representation in thinking is often downplayed because of an ideal of rationality that dictates that whenever two statements are mathematically or logically the same, representing them in different forms should not matter. Evidence that it does matter is regarded as a sign of human irrationality. This view ignores the fact that finding a good representation is an indispensable part of problem solving and that playing with different representations is a tool of creative thinking." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"The possibility of translating uncertainties into risks is much more restricted in the propensity view. Propensities are properties of an object, such as the physical symmetry of a die. If a die is constructed to be perfectly symmetrical, then the probability of rolling a six is 1 in 6. The reference to a physical design, mechanism, or trait that determines the risk of an event is the essence of the propensity interpretation of probability. Note how propensity differs from the subjective interpretation: It is not sufficient that someone’s subjective probabilities about the outcomes of a die roll are coherent, that is, that they satisfy the laws of probability. What matters is the die’s design. If the design is not known, there are no probabilities." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"When does an uncertainty qualify as a risk? The answer depends on one’s interpretation of probability, of which there are three major versions: degree of belief, propensity, and frequency. Degrees of belief are sometimes called subjective probabilities. Of the three interpretations of probability, the subjective interpretation is most liberal about expressing uncertainties as quantitative probabilities, that is, risks. Subjective probabilities can be assigned even to unique or novel events." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"When natural frequencies are transformed into conditional probabilities, the base rate information is taken out (this is called normalization). The benefit of this normalization is that the resulting values fall within the uniform range of 0 and 1. The cost, however, is that when drawing inferences from probabilities (as opposed to natural frequencies), one has to put the base rates back in by multiplying the conditional probabilities by their respective base rates." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"Why does representing information in terms of natural frequencies rather than probabilities or percentages foster insight? For two reasons. First, computational simplicity: The representation does part of the computation. And second, evolutionary and developmental primacy: Our minds are adapted to natural frequencies." (Gerd Gigerenzer, "Calculated Risks: How to know when numbers deceive you", 2002)

"A heuristic is defined as a simple rule that exploits both evolved abilities to act fast and struc- tures of the environment to act accurately and frugally. The complexity and uncertainty of an environment cannot be determined independently of the actor. What matters is the degree of complexity and uncertainty encountered by the decision maker." (Christoph Engel & Gerd Gigerenzer, "Law and Heuristics: An interdisciplinary venture" [in "Heuristics and the Law", 2006)

"Heuristics are needed in situations where the world does not permit optimization. For many real-world problems (as opposed to optimization-tuned textbook problems), optimal solutions are unknown because the problems are computationally intractable or poorly defined." (Christoph Engel & Gerd Gigerenzer, "Law and Heuristics: An interdisciplinary venture" [in "Heuristics and the Law", 2006)

"[...] a gut feeling is not caprice or a sixth sense. An executive may be buried under a mountain of information, some of which is contradictory, some of questionable reliability, and some that makes one wonder why it was sent in the first place. But despite the excess of data, there is no algorithm to calculate the best decision. In this situation, an experienced executive may have a feeling of what the best action is - a gut feeling. By definition, the reasons behind this feeling are unconscious." (Gerd Gigerenzer, "Risk Savvy: How to make good decisions", 2014)

"A rule of thumb, or heuristic, enables us to make a decision fast, without much searching for information, but nevertheless with high accuracy. [...] A heuristic can be safer and more accurate than a calculation, and the same heuristic can underlie both conscious and unconscious decisions." (Gerd Gigerenzer, "Risk Savvy: How to make good decisions", 2014)

"Probability theory provides the best answer only when the rules of the game are certain, when all alternatives, consequences, and probabilities are known or can be calculated. [...] In the real game, probability theory is not enough. Good intuitions are needed, which can be more challenging than calculations. One way to reduce uncertainty is to rely on rules of thumb." (Gerd Gigerenzer, "Risk Savvy: How to make good decisions", 2014)

"Teaching statistical thinking means giving people tools for problem solving in the real world. It should not be taught as pure mathematics. Instead of mechanically solving a dozen problems with the help of a particular formula, children and adolescents should be asked to find solutions to real-life problems. That’s what teaches them how to solve problems, and also shows that there may be more than one good answer in the first place. Equally important is encouraging curiosity, such as asking for answers to questions by doing experiments." (Gerd Gigerenzer, "Risk Savvy: How to make good decisions", 2014)

"The taming of chance created mathematical probability. [...] Probability is not one of a kind; it was born with three faces: frequency, physical design, and degrees of belief. [...] in the first of its identities, probability is about counting. [...] Second, probability is about constructing. For example, if a die is constructed to be perfectly symmetrical, then the probability of rolling a six is one in six. You don’t have to count. [...] Probabilities by design are called propensities. Historically, games of chance were the prototype for propensity. These risks are known because people crafted, not counted, them. [...] Third, probability is about degrees of belief. A degree of belief can be based on anything from experience to personal impression." (Gerd Gigerenzer, "Risk Savvy: How to make good decisions", 2014)

"There is a mathematical theory that tells us why and when simple is better. It is called the bias-variance dilemma. [...] How far we go in simplifying depends on three features. First, the more uncertainty, the more we should make it simple. The less uncertainty, the more complex it should be. [...] Second, the more alternatives, the more we should simplify; the fewer, the more complex it can be. The reason is that complex methods need to estimate risk factors, and more alternatives mean that more factors need to be estimated, which leads to more estimation errors being made. [...] Finally, the more past data there are, the more beneficial for the complex methods." (Gerd Gigerenzer, "Risk Savvy: How to make good decisions", 2014)

"To calculate a risk is one thing, to communicate it is another. Risk communication is an important skill for laypeople and experts alike. Because it’s rarely taught, misinterpreting numbers is the rule rather than the exception. Each of the three kinds of probability - relative frequency, design, or degree of belief - can be framed in either a confusing or a transparent way. So far we have seen two communication tools for reporting risks: Use frequencies instead of single-event probabilities. Use absolute instead of relative risks."  (Gerd Gigerenzer, "Risk Savvy: How to make good decisions", 2014)

"A heuristic is a strategy that ignores part of the information, with the goal of making decisions more quickly, frugally, and/or accurately than more complex methods." (Gerd Gigerenzer et al, "Simply Rational: Decision Making in the Real World", 2015)

"Probability theory is not the only tool for rationality. In situations of uncertainty, as opposed to risk, simple heuristics can lead to more accurate judgments, in addition to being faster and more frugal. Under uncertainty, optimal solutions do not exist (except in hindsight) and, by definition, cannot be calculated. Thus, it is illusory to model the mind as a general optimizer, Bayesian or otherwise. Rather, the goal is to achieve satisficing solutions, such as meeting an aspiration level or coming out ahead of a competitor."  (Gerd Gigerenzer et al, "Simply Rational: Decision Making in the Real World", 2015)

On Risk II: Trivia

"A mind that questions everything, unless strong enough to bear the weight of its ignorance, risks questioning itself and being engulfed in doubt." (Émile Durkheim, "Suicide: A Study in Sociology", 1897)

"It is a matter of primary importance in the cultivation of those sciences in which truth is discoverable by the human intellect that the investigator should be free, independent, unshackled in his movement; that he should be allowed and enabled to fix his mind intently, nay, exclusively, on his special object, without the risk of being distracted every other minute in the process and progress of his inquiry by charges of temerariousness, or by warnings against extravagance or scandal." (John H Newman, "The Idea of a University Defined and Illustrated", 1905)

"The final truth about phenomena resides in the mathematical description of it; so long as there is no imperfection in this, our knowledge is complete. We go beyond the mathematical formula at our own risk; we may find a [nonmathematical] model or picture that helps us to understand it, but we have no right to expect this, and our failure to find such a model or picture need not indicate that either our reasoning or our knowledge is at fault." (James Jeans, "The Mysterious Universe", 1930)

"It is easy to obtain confirmations, or verifications, for nearly every theory - if we look for confirmations. Confirmations should count only if they are the result of risky predictions. […] A theory which is not refutable by any conceivable event is non-scientific. Irrefutability is not a virtue of a theory (as people often think) but a vice. Every genuine test of a theory is an attempt to falsify it, or refute it." (Karl R Popper,"Conjectures and Refutations: The Growth of Scientific Knowledge", 1963)

"Taking no action to solve these problems is equivalent of taking strong action. Every day of continued exponential growth brings the world system closer to the ultimate limits of that growth. A decision to do nothing is a decision to increase the risk of collapse." (Donella Meadows et al, "The Limits to Growth", 1972)

"Demonstrative reasoning differs from plausible reasoning just as the fact differs from the supposition, just as actual existence differs from the possibility of existence. Demonstrative reasoning is reliable, incontrovertible and final. Plausible reasoning is conditional, arguable and oft-times risky." (Yakov Khurgin, "Did You Say Mathematics?", 1974)

"In reasoning, as in every other activity, it is, of course, easy to fall into error. In order to reduce this risk, at least to some extent, it is useful to support intuition with suitable superstructures: in this case, the superstructure is logic (or, to be precise, the logic of certainty)." (Bruno de Finetti, "Theory of Probability", 1974)

"When you are confronted by any complex social system […] with things about it that you’re dissatisfied with and anxious to fix, you cannot just step in and set about fixing with much hope of helping. This realization is one of the sore discouragements of our century […] You cannot meddle with one part of a complex system from the outside without the almost certain risk of setting off disastrous events that you hadn’t counted on in other, remote parts. If you want to fix something you are first obliged to understand […] the whole system. […] Intervening is a way of causing trouble." (Lewis Thomas, "The Medusa and the Snail: More Notes of a Biology Watcher", 1974)

"I find it more difficult, but also much more fun, to get the right answer by indirect reasoning and before all the evidence is in. It’s what a theoretician does in science. But the conclusions drawn in this way are obviously more risky than those drawn by direct measurement, and most scientists withhold judgment until there is more direct evidence available. The principal function of such detective work - apart from entertaining the theoretician - is probably to so annoy and enrage the observationalists that they are forced, in a fury of disbelief, to perform the critical measurements." (Carl Sagan, "The Cosmic Connection: An Extraterrestrial Perspective", 1975)

"Human language is a vehicle of truth but also of error, deception, and nonsense. Its use, as in the present discussion, thus requires great prudence. One can improve the precision of language by explicit definition of the terms used. But this approach has its limitations: the definition of one term involves other terms, which should in turn be defined, and so on. Mathematics has found a way out of this infinite regression: it bypasses the use of definitions by postulating some logical relations (called axioms) between otherwise undefined mathematical terms. Using the mathematical terms introduced with the axioms, one can then define new terms and proceed to build mathematical theories. Mathematics need, not, in principle rely on a human language. It can use, instead, a formal presentation in which the validity of a deduction can be checked mechanically and without risk of error or deception." (David Ruelle,"The Mathematician's Brain", 2007)

"Technology is the result of antifragility, exploited by risk-takers in the form of tinkering and trial and error, with nerd-driven design confined to the backstage." (Nassim N Taleb, "Antifragile: Things that gain from disorder", 2012)

"This is the central illusion in life: that randomness is risky, that it is a bad thing - and that eliminating randomness is done by eliminating randomness. Randomness is distributed rather than concentrated." (Nassim N Taleb, "Antifragile: Things that gain from disorder", 2012) 

On Risk I

"The Risk of losing any Sum is the reverse of Expectation; and the true measure of it is, the product of the Sum adventured multiplied by the Probability of the Loss." (Abraham de Moivre, "The Doctrine of Chances", 1718)

"The modern theory of decision making under risk emerged from a logical analysis of games of chance rather than from a psychological analysis of risk and value. The theory was conceived as a normative model of an idealized decision maker, not as a description of the behavior of real people." (Amos Tversky & Daniel Kahneman, "Rational Choice and the Framing of Decisions", The Journal of Business Vol. 59 (4), 1986)

"Conversely, there are few features of life, the universe, or anything, in which chance is not in some way crucial. Nor is this merely some abstruse academic point; assessing risks and taking chances are inescapable facets of everyday existence. It is a trite maxim to say that life is a lottery; it would be more true to say that life offers a collection of lotteries that we can all, to some extent, choose to enter or avoid. And as the information at our disposal increases, it does not reduce the range of choices but in fact increases them." (David Stirzaker, "Probability and Random Variables: A Beginner's Guide", 1999)

"Players must accept the cards dealt to them. However, once they have those cards in hand, they alone choose how they will play them. They decide what risks and actions to take." (John C Maxwell, "The Difference Maker: Making Your Attitude Your Greatest Asset", 2006)

"When confronted with multiple models, I find it revealing to pose the resulting uncertainty as a two-stage lottery. For the purposes of my discussion, there is no reason to distinguish unknown models from unknown parameters of a given model. I will view each parameter configuration as a distinct model. Thus a model, inclusive of its parameter values, assigns probabilities to all events or outcomes within the model’s domain. The probabilities are often expressed by shocks with known distributions and outcomes are functions of these shocks. This assignment of probabilities is what I will call risk. By contrast there may be many such potential models. Consider a two-stage lottery where in stage one we select a model and in stage two we draw an outcome using the model probabilities. Call stage one model ambiguity and stage two risk that is internal to a model." (Lars P Hansen, "Uncertainty Outside and Inside Economic Models", [Nobel lecture] 2013)

"Without context, data is useless, and any visualization you create with it will also be useless. Using data without knowing anything about it, other than the values themselves, is like hearing an abridged quote secondhand and then citing it as a main discussion point in an essay. It might be okay, but you risk finding out later that the speaker meant the opposite of what you thought." (Nathan Yau, "Data Points: Visualization That Means Something", 2013)

"Mental Modeling enables discovery of people’s mental models in a structured, rigorous, respectful manner. Mental Modeling has been recognized as one of the premier methods for informing the development of strategies and communications that precisely address people’s current thinking, judgment, decision making, and behavior on complex issues , including risk issues. Broadly, Mental Modeling works from the"inside out," starting with an in-depth understanding of people’s mental models, and then using that insight to develop focused strategies and communication that builds on where people are at in their thinking today, reinforcing what they know about a topic and addressing critical gaps. Broadly stated, the goal is to help people make well-informed decisions and take appropriate actions on the topic at hand." (Matthew D Wood, An Introduction to Mental Modeling, [in "Mental Modeling Approach: Risk Management Application Case Studies"], 2017)

"Premature enumeration is an equal-opportunity blunder: the most numerate among us may be just as much at risk as those who find their heads spinning at the first mention of a fraction. Indeed, if you’re confident with numbers you may be more prone than most to slicing and dicing, correlating and regressing, normalizing and rebasing, effortlessly manipulating the numbers on the spreadsheet or in the statistical package - without ever realizing that you don’t fully understand what these abstract quantities refer to. Arguably this temptation lay at the root of the last financial crisis: the sophistication of mathematical risk models obscured the question of how, exactly, risks were being measured, and whether those measurements were something you’d really want to bet your global banking system on." (Tim Harford, "The Data Detective: Ten easy rules to make sense of statistics", 2020)

"Sample error reflects the risk that, purely by chance, a randomly chosen sample of opinions does not reflect the true views of the population. The 'margin of error' reported in opinion polls reflects this risk, and the larger the sample, the smaller the margin of error. […] sampling error has a far more dangerous friend: sampling bias. Sampling error is when a randomly chosen sample doesn’t reflect the underlying population purely by chance; sampling bias is when the sample isn’t randomly chosen at all." (Tim Harford, "The Data Detective: Ten easy rules to make sense of statistics", 2020)

Peter L Bernstein - Collected Quotes

"A normal distribution is most unlikely, although not impossible, when the observations are dependent upon one another - that is, when the probability of one event is determined by a preceding event. The observations will fail to distribute themselves symmetrically around the mean." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"All the law [of large numbers] tells us is that the average of a large number of throws will be more likely than the average of a small number of throws to differ from the true average by less than some stated amount. And there will always be a possibility that the observed result will differ from the true average by a larger amount than the specified bound." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"But real-life situations often require us to measure probability in precisely this fashion - from sample to universe. In only rare cases does life replicate games of chance, for which we can determine the probability of an outcome before an event even occurs - a priori […] . In most instances, we have to estimate probabilities from what happened after the fact - a posteriori. The very notion of a posteriori implies experimentation and changing degrees of belief." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"In a mathematical sense a zero-sum game is a loser's game when it is valued in terms of utility. The best decision for both is to refuse to play this game." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Jacob Bernoulli's theorem for calculating probabilities a posteriori is known as the Law of Large Numbers. Contrary to the popular view, this law does not provide a method for validating observed facts, which are only an incomplete representation of the whole truth. Nor does it say that an increasing number of observations will increase the probability that what you see is what you are going to get. The law is not a design for improving the quality of empirical tests […]." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Losing streaks and winning streaks occur frequently in games of chance, as they do in real life. Gamblers respond to these events in asymmetric fashion: they appeal to the law of averages to bring losing streaks to a speedy end. And they appeal to that same law of averages to suspend itself so that winning streaks will go on and on. The law of averages hears neither appeal. The last sequence of throws of the dice conveys absolutely no information about what the next throw will bring. Cards, coins, dice, and roulette wheels have no memory." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Pascal's Triangle and all the early work in probability answered only one question: what is the probability of such-and-such an outcome? The answer to that question has limited value in most cases, because it leaves us with no sense of generality." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996) 

"Probability has always carried this double meaning, one looking into the future, the other interpreting the past, one concerned with our opinions, the other concerned with what we actually know." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Probability theory is a serious instrument for forecasting, but the devil, as they say, is in the details - in the quality of information that forms the basis of probability estimates." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Reality is a series of connected events, each dependent on another, radically different from games of chance in which the outcome of any single throw has zero influence on the outcome of the next throw. Games of chance reduce everything to a hard number, but in real life we use such measures as 'a little', 'a lot', or 'not too much, please' much more often than we use a precise quantitative measure." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"So we pour in data from the past to fuel the decision-making mechanisms created by our models, be they linear or nonlinear. But therein lies the logician's trap: past data from real life constitute a sequence of events rather than a set of independent observations, which is what the laws of probability demand. [...] It is in those outliers and imperfections that the wildness lurks." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"The dice and the roulette wheel, along with the stock market and the bond market, are natural laboratories for the study of risk because they lend themselves so readily to quantification; their language is the language of numbers." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"The Law of Large Numbers does not tell you that the average of your throws will approach 50% as you increase the number of throws; simple mathematics can tell you that, sparing you the tedious business of tossing the coin over and over. Rather, the law states that increasing the number of throws will correspondingly increase the probability that the ratio of heads thrown to total throws will vary from 50% by less than some stated amount, no matter how small. The word 'vary' is what matters. The search is not for the true mean of 50% but for the probability that the error between the observed average and the true average will be less than, say, 2% - in other words, that increasing the number of throws will increase the probability that the observed average will fall within 2% of the true average." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"The resolution of how to divide the stakes in an uncompleted game marked the beginning of a systematic analysis of probability - the measure of our confidence that something is going to happen. It brings us to the threshold of the quantification of risk." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"The theory of probability can define the probabilities at the gaming casino or in a lottery - there is no need to spin the roulette wheel or count the lottery tickets to estimate the nature of the outcome - but in real life relevant information is essential. And the bother is that we never have all the information we would like. Nature has established patterns, but only for the most part. Theory, which abstracts from nature, is kinder: we either have the information we need or else we have no need for information." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Time is the dominant factor in gambling. Risk and time are opposite sides of the same coin, for if there were no tomorrow there would be no risk. Time transforms risk, and the nature of risk is shaped by the time horizon: the future is the playing field." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Under conditions of uncertainty, both rationality and measurement are essential to decision-making. Rational people process information objectively: whatever errors they make in forecasting the future are random errors rather than the result of a stubborn bias toward either optimism or pessimism. They respond to new information on the basis of a clearly defined set of preferences. They know what they want, and they use the information in ways that support their preferences." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Under conditions of uncertainty, the choice is not between rejecting a hypothesis and accepting it, but between reject and not - reject. You can decide that the probability that you are wrong is so small that you should not reject the hypothesis. You can decide that the probability that you are wrong is so large that you should reject the hypothesis. But with any probability short of zero that you are wrong - certainty rather than uncertainty - you cannot accept a hypothesis." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Until we can distinguish between an event that is truly random and an event that is the result of cause and effect, we will never know whether what we see is what we'll get, nor how we got what we got. When we take a risk, we are betting on an outcome that will result from a decision we have made, though we do not know for certain what the outcome will be. The essence of risk management lies in maximizing the areas where we have some control over the outcome while minimizing the areas where we have absolutely no control over the outcome and the linkage between effect and cause is hidden from us." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"We can assemble big pieces of information and little pieces, but we can never get all the pieces together. We never know for sure how good our sample is. That uncertainty is what makes arriving at judgments so difficult and acting on them so risky. […] When information is lacking, we have to fall back on inductive reasoning and try to guess the odds." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Whenever we make any decision based on the expectation that matters will return to 'normal', we are employing the notion of regression to the mean." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)

"Without numbers, there are no odds and no probabilities; without odds and probabilities, the only way to deal with risk is to appeal to the gods and the fates. Without numbers, risk is wholly a matter of gut." (Peter L Bernstein, "Against the Gods: The Remarkable Story of Risk", 1996)