The Drunkard’s Walk: How Randomness Rules Our Lives
by Leonard Mlodinow
The Drunkard’s Walk is a wonderful blend of statistics, psychology, business, history, and everyday life. Mlodinow’s slightly dry sense of humor makes the book fun and easy to read.
He gives powerful examples of subtle, yet critically important, errors in the way statistics are used in law, medicine, investing, and sports. Another theme is that many extraordinary performances are not unbelievable long shots but the inevitable result of a large number of people trying for a long time. Talent is an important factor – Tiger Woods is much more likely to get a hole in one than I am – but among professional golfers, holes in one likely follow a random distribution.
Mlodinow points out that compensation for investment analysts and film industry executives is based on the premise that winners can be picked despite repeated demonstrations that actual performance is random. Most businesses are afraid to take a chance on a new approach, but significant savings are possible with a new compensation model that sacrifices nothing in results.
His advice for winning in a world heavily influenced by random factors? More “at bats”. Just keep trying