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"Optimizer's Curse"

Link to a brief handout:  optcurse.pdf

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.