FINDING A PATTERN IN RANDOMNESS.

FINDING A PATTERN IN RANDOMNESS. I posted here on the Random Walk Hypothesis in response to Annalisa’s comment that stock prices seem to move randomly. Humans see patterns even when there is no pattern and look for causation where none exists. They look for patterns in the movements of stock prices and commodity prices. No matter how large the price movement.there is always an explanation in the newspapers the next day. Jonah Lehrer describes an experiment in which rats were presented with a choice. On average, going to the left gave the rat a reward 60% of the time, but whether there was a reward was randomly distributed. The rats soon learned to go left all of the time, and were rewarded 60% of the time. Yale undergraduates were given the same kind of choice. They kept trying to find a pattern and wound up being rewarded only 52% of the time.