Critical Thought Experiments

Stock market tip scam

"...when you have eliminated the impossible, whatever remains, however improbable, must be the truth..."

Being psychic is impossible

Originally Posted by Heisenberg

You don't know me. I send you a letter stating that I am a precognitive psychic. To prove this I tell you I am going to make one specific prediction per week for the next 6 months. I then proceed to send you 26 letters, each with some sort of successful prediction. Some predict the outcome of elections. Some predict the winners of sports events of all types and regions. I predict trophy winners of various races from horse to human to car. Some predict the rising and falling of various unrelated stocks. I successfully predict the next president, the next to be fired on The Apprentice, and so on and so on. My last prediction was even personal, that you would have a car accident sometime in the next week. Each prediction is well in advance and is never wrong. The variety is such that I can not have inside information about all areas, and the volume is such that it can not be pure chance. At the end of the 6 months do you believe I am a psychic? If not, why?

OK I'll take a nibble. It is very improbable but still possible that Mr. Psychic threw the dice 26 times and won every time. So while I would be quite impressed, and would need to allow that Mr. Psychic is probably onto something big here, I can't countenance that as proof.

Verdict: inconclusive. cn

I agree with MP. Let's say you send out one million letters. Of those letters, half say the stock will go up and half say the stock will go down. You'd be correct for 500,000 people. you do this again and this time is correct for 250,000 people. By the fifth letter you have been correct 100% of the time for 30,000 people. A lot of those 30,000 will buy what you are selling.
I did this kind of thing as a teenager: I got a letter with a 2 cent stamp and the seller said he would teach me the secret of mailing any letter for 2 cents (I was into direct marketing at the time, and this would've saved me a fortune). I sent in the $20 and never received anything, keep in mind this was before the internet. I then realized that if you stick a 2 cent stamp on a shitload of letters, some were bound to slip through the cracks. I ran the scam myself and received a few hundred dollars in profit. Then, one day someone rang my apartment buzzer early in the morning. It was a post office executive! I let him up and he handed me about 500 of my most recent mailed letters with the 2 cent stamp. He explained that if I do this again, I'm going to jail. I think he was surprised to see an 18 year old was running this scam, and I bet he's told the story and laughed his ass off dozens of times throughout the years. I certainly would have

Originally Posted by cannabineer

OK I'll take a nibble. It is very improbable but still possible that Mr. Psychic threw the dice 26 times and won every time. So while I would be quite impressed, and would need to allow that Mr. Psychic is probably onto something big here, I can't countenance that as proof.

Verdict: inconclusive. cn

You are on the right track thinking about odds, but the 26th prediction was not simply 1/6 chance.

Originally Posted by tyler.durden

I agree with MP. Let's say you send out one million letters. Of those letters, half say the stock will go up and half say the stock will go down. You'd be correct for 500,000 people. you do this again and this time is correct for 250,000 people. By the fifth letter you have been correct 100% of the time for 30,000 people. A lot of those 30,000 will buy what you are selling.
I did this kind of thing as a teenager: I got a letter with a 2 cent stamp and the seller said he would teach me the secret of mailing any letter for 2 cents (I was into direct marketing at the time, and this would've saved me a fortune). I sent in the $20 and never received anything, keep in mind this was before the internet. I then realized that if you stick a 2 cent stamp on a shitload of letters, some were bound to slip through the cracks. I ran the scam myself and received a few hundred dollars in profit. Then, one day someone rang my apartment buzzer early in the morning. It was a post office executive! I let him up and he handed me about 500 of my most recent mailed letters with the 2 cent stamp. He explained that if I do this again, I'm going to jail. I think he was surprised to see an 18 year old was running this scam, and I bet he's told the story and laughed his ass off dozens of times throughout the years. I certainly would have

Very good!! and the car accident? Bonus question, assuming each situation had a 50/50 chance, how many letters did I send out?

Originally Posted by Heisenberg

You are on the right track thinking about odds, but the 26th prediction was not simply 1/6 chance.

Did I imply that? I'm not seeing how ... I'm discarding the last one because it could be made to happen. I'm assuming here that the remaining 25 were not obtained by cheating ... considering the sorts of events being predicted, it would have to be a sophisticated sort of cheat using maneuvers not covered in your "situation setup" description. So getting those 25 right by sheer luck remains improbable but possible. cn

Originally Posted by Heisenberg

Very good!! and the car accident? Bonus question, how many letters did I send out?

Twenty-six. it was in the opener. Introducing other players wasn't. cn