5 questions to test your understanding
A manager builds a detailed financial model predicting strong performance for an investment. When it performs poorly, she argues the market was irrational and her analysis was still fundamentally correct. What error in reasoning is this?
Which best describes what makes a belief a good 'map'?
The map-territory distinction implies that because our beliefs are typically imperfect representations, we can seldom have confident knowledge about the world.
When a prediction based on your beliefs turns out to be wrong, the rational response is to update the belief rather than reinterpret the outcome as consistent with it.
Give an example of map-territory confusion from everyday life and explain what the rational correction would be.