John Kay

Probabilistic thinking requires us to recognise both that something might happen and that it is unlikely that it will. Because this is difficult, we are always surprised, shocked, and inadequately prepared for extreme events.

Faced with the choice of over a hundred 100 jams, I reduced the number of alternatives to 30 or so, and then … well, I finally walked out of the shop without having bought any jam at all. People are overwhelmed by variety of choice.

Irrationality lies not in failing to conform to some preconceived notion of how we should behave, but in persisting with a course of action that does not work.

Wherever there is uncertainty, market prices reflect the beliefs of those who are more than averagely sanguine. The result is a reserve of illusory value, constantly depleted by events and replenished by fresh uncertainties.

Most people dislike confrontation, and, given time, an aggressive minority will find itself alienated. Meet the reasonable demands, and appear to treat the unreasonable ones with seriousness; always engage in discussion, however futile.

The political and regulatory incentives are either to downplay risks or exaggerate them – or to do each at different times.

Successful decision-making is more limited in aspiration, more modest in its beliefs about its knowledge of the world, more responsive to the reactions of others, more sensitive to the complexity of the systems with which it engages. Complex goals are generally best achieved obliquely.

Every era spawns financial follies. Every era spawns observations that, with hindsight, protagonists wish they had not made.