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No. 44 · Risk · Statistics and Probability

Randomness

Much of life is chance, and our minds invent patterns that are not there.

Randomness means individual outcomes can't be predicted, yet we keep spotting patterns in pure chance. Britain built ERNIE in 1957 to pick Premium Bond winners from electrical noise, while Belgium's gaming regulator judged EA's paid FIFA packs a game of chance.

Before reacting to a streak, check whether it's noise. Set budgets before buying anything sold as a lucky dip. And use a coin flip on purpose when you need a fair, unrigged decision.

In the Almanac

“ERNIE’s draw”, 1957 · “Electronic Arts”, 2018

Both stories in full, three ways to use it and where it misleads.

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Randomness

Questions

What is Randomness?

Randomness means individual outcomes can't be predicted, yet we keep spotting patterns in pure chance. Britain built ERNIE in 1957 to pick Premium Bond winners from electrical noise, while Belgium's gaming regulator judged EA's paid FIFA packs a game of chance.

How do you use Randomness?

Before reacting to a streak, check whether it's noise. Set budgets before buying anything sold as a lucky dip. And use a coin flip on purpose when you need a fair, unrigged decision.

When does Randomness matter?

Randomness is one of the 32 mental models for risk, the situations where you ask: What could go wrong, and what will I do if it does? Within that, it belongs to “Thinking in odds”, alongside Expected Value, Fat-Tailed Distributions and Foxes vs Hedgehogs.

What is an example of Randomness?

Two stories show it at work: ERNIE’s draw (1957) and Electronic Arts (2018). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.

Which mental models are related to Randomness?

Clustering Illusion, Birth Lottery and Regression to the Mean. Randomness itself comes from statistics and probability.