Imagine I observe two poker players playing two tournaments each. During their first tournaments, Player A makes $1200 and Player B loses $800. During her second tournament, Player A pockets another $1000. Player B, on the other hand, loses $1100 more during her second tournament. Would it be a good decision for me to sit down at a table and model my play after Player A?
For many people the answer to this question – no – is counterintuitive. I watched Player A and Player B play two tournaments each and their results were very different – haven’t I seen enough to conclude that Player A is the better poker player? Yet poker involves a considerable amount of luck and there are numerous possible short- and longer-term outcomes for skilled and unskilled players. As Nate Silver writes in The Signal and the Noise, I could monitor each player’s winnings…