Tuesday, 2 April 2013

Regression To The Mean

2002 Nobel Prize Economics was won by Daniel Kahneman, a Psychologist, not an economist.
He studied the cognitive factors behind decision-making, and the statistics 'regression to the mean' on Officer Cadet Training. He found: "Praise is more effective than punishment for making cadets learn."

"Regression to the Mean" (Math): means 'An extreme event is likely to be followed by a less extreme event.'
=> eventually forms a Normal distribution centred around the Mean.

Example:
Sports: sportsman suffers a marked drop after appearing in the sport magazines - 'Curse of Sports Illustrated' phenomenon.

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