I finally read the original paper by Dunning and Kruger where they present the studies and discuss the implications. Dunning - Kruger effect is a bit more known now due to the behavior of the newly-elected upper management of this country, though this paper made it into my "to-read" pile way back in 2015. The general description is pretty intuitive - someone who is incompetent at something is usually unable to recognize their own incompetence. However, the paper is full of various goodies that are corollary to the main effect. For example, incompetent group not only overestimated their ability, but also their ability to re-evaluate themselves when presented with evidence (i.e. results from other participants). Very good and useful read, both as an insight into the crowd mentality as well as to better understand your own shortcomings as a trader. http://psych.colorado.edu/~vanboven/teaching/p7536_heurbias/p7536_readings/kruger_dunning.pdf
imo, I think the key issue would be crowd mentality - also incompetence. Sometimes, the crowd prefer a new style of entertainment, rather than the conventional ones that can be boring after watching too long time. Most importantly, an average elected-politician usually can offer/promise to the crowd much better entertainment than a usually unpopular elected-statesman.
There is a discussion of related research here: https://www.bloomberg.com/view/arti...ous-disability-it-s-the-dunning-kruger-effect Obviously, it's presented in the context of politics.
Yeah, I was hoping to avoid that angle. There is an interesting paper on gender differences with regards to DK effect. You can probably guess the results.
Excellent article. Not knowing what you don't know happens to the best of us even very highly paid hedge fund traders eg Brian Hunter and highly touted hedge funds eg LTCM. Prediction #1 applies both to Hunter and LTCM.
They both were not elected executives. Hardly any traders. Personally, I wouldn't consider them and their highly trained/qualified/experienced staff were incompetent ones. Traders, imo, are actually engaged in competitive games business. A competent trader could be sometimes beaten by other competent ones - however maybe only some of the times.
Traders all know that one single time (mistake) should be more than enough to cause wipe-out. Hence I personally would still think these people were smart/competent guys, considering their past performance before wide-out.
Introvert self-assessed superiority actually is a major problem. Lawyers are mostly introverts and judges are all lawyers so if one wants to study Dunning Kruger there is hardly a better Petri Dish. Look at all the cases where an innocent person is jailed, after awhile it's plainly proven that someone else did the deed but the court systems just won't respond. I'm thinking that it's SOP to not respond largely because of the introvert's inability to think they were wrong...