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What it's about: The mere process of screening our investments can introduce a bias, even if the investment evaluations are carefully and objectively prepared. On average, the investment evaluations may be objective, i.e., unbiased. However, a selected investment is more likely to be one where we are randomly optimistic.
The optimizer's curse is analogous to:
—John Schuyler, May. 2006.
Copyright © 2006 by John R. Schuyler. All rights reserved. Permission to copy with reproduction of this notice.