causal

As-If Works Only With Repeated Fast Feedback

The 'as if' argument works for the pool player and the fly-ball catcher because they get a million-plus repetitions with near-instantaneous feedback in a structured environment; it fails for decisions like corporate capital structure where the decision is rare, the feedback is slow and ambiguous (requiring the stock market itself to be solving the equations), and experts can't even agree on the model.

causalpending

Speaker

Paul Pfleiderer

Evidence Quote

in a lot of cases where it's applied, it's just wishful thinking... asking if these really apply to the real world and people are actually able to make decisions in that way, I think doesn't pass the smell test.

Source

Paul Pfleiderer on the Misuse of Economic ModelsEconTalk
Created: 6/13/2026, 12:27:00 AM

My Notes

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