3 ms·

Almost all of the interesting stuff comes after you've made your estimates (although the process of getting to the estimates is not completely uninformative).

Almost all of the interesting stuff comes after you've made your estimates (although the process of getting to the estimates is not completely uninformative). If the candidate performs well on this question, then they have shown: 1. They have the ability to reason about problems in a potentially new domain. 2. They have the ability to pare down a problem to what is important and what can be neglected. 3. They can make good order-of-magnitude estimates (very important for an equities trader). 4. They are aware of the typical size of their errors, or can estimate them. 5. The are aware of the typical sources of error. 6. They understand the notion of a confidence interval and can apply it to real-world situations. 7. They can reason about bets with different characteristics (e.g. different expected value, different skew characteristics) and choose a good portfolio of bets. I think that knowing how GDP is calculated is useful information for someone working in finance. Especially someone who is going to have to trade through economic announcements. Would you hire a trader who didn't follow economic news? PS re "shows you've visited London" - the interview was in London. I assume if it had been in New York, they would have asked about the New York metro.

dalke 14y ago
I passed the first test on rote memorization. The second was nearly the same. Only the third would have given information about my ability to estimate, which isn't enough to give real information about those 7 bullet points. I remain doubtful about the utility of these tests. There is nothing, for example, which probes my experience with statistics. Here's a more in-depth test. We run an medical experiment on lab rats. The protocol says that we will experiment on 20 rats, and that a mortality rate above 30% is too high so we must stop the experiment. After 5 rats, 2 have died. Should we stop the experiment now? Why or why not? One could look at that and say that a 2/5=40%>30% so of course it should be stopped - it's higher than the allowed rate. A better response is to point out that if 10% is acceptable, then there's a 0.9^3 * 0.1^2 * C(5,3) = 7% chance that this is an expected statistical fluctuation, and that the experimental protocols should have given some guideline on how certain one needs to be in knowing if the mortality rate was too high. An even better response would be to point out that this means the first three rats lived, and it was only rats 4 and 5 which died, as otherwise the experiment would have stopped earlier under this protocol. In that case the possible experimental states are: 1) first rat died, so the experiment stopped = p. 2) first lived, second died, stop = p. 3) first lived, second lived, third died, stop = p. 4) first, second, third lived, fourth died, fifth lived = (1-p). and 5) first, second, third lived, fourth and fifth died = p giving (assuming I recall how to do this correctly) p+p+p+(1-p)+p = 1.0 or an estimated mortality rate of p=0.3. In other words, this experiment is allowed to keep on going under the given protocol. But this sort of modeling awareness is not present in the three tests you mentioned, despite being directly relevant, I assume, to what a trader does.
- crntaylor 14y ago
  Yes, this kind of statistical modelling is certainly very relevant. I don't want to give the impression that this was the only question I was asked, or that it covers everything you need to know about a candidate. The entire question and discussion took about 15 minutes. I was asked questions of a similar kind to the one you propose in the other 11.75 hours of interviews.

dalke 14y ago

I passed the first test on rote memorization. The second was nearly the same. Only the third would have given information about my ability to estimate, which isn't enough to give real information about those 7 bullet points. I remain doubtful about the utility of these tests. There is nothing, for example, which probes my experience with statistics. Here's a more in-depth test. We run an medical experiment on lab rats. The protocol says that we will experiment on 20 rats, and that a mortality rate above 30% is too high so we must stop the experiment. After 5 rats, 2 have died. Should we stop the experiment now? Why or why not? One could look at that and say that a 2/5=40%>30% so of course it should be stopped - it's higher than the allowed rate. A better response is to point out that if 10% is acceptable, then there's a 0.9^3 * 0.1^2 * C(5,3) = 7% chance that this is an expected statistical fluctuation, and that the experimental protocols should have given some guideline on how certain one needs to be in knowing if the mortality rate was too high. An even better response would be to point out that this means the first three rats lived, and it was only rats 4 and 5 which died, as otherwise the experiment would have stopped earlier under this protocol. In that case the possible experimental states are: 1) first rat died, so the experiment stopped = p. 2) first lived, second died, stop = p. 3) first lived, second lived, third died, stop = p. 4) first, second, third lived, fourth died, fifth lived = (1-p). and 5) first, second, third lived, fourth and fifth died = p giving (assuming I recall how to do this correctly) p+p+p+(1-p)+p = 1.0 or an estimated mortality rate of p=0.3. In other words, this experiment is allowed to keep on going under the given protocol. But this sort of modeling awareness is not present in the three tests you mentioned, despite being directly relevant, I assume, to what a trader does.

crntaylor 14y ago
Yes, this kind of statistical modelling is certainly very relevant. I don't want to give the impression that this was the only question I was asked, or that it covers everything you need to know about a candidate. The entire question and discussion took about 15 minutes. I was asked questions of a similar kind to the one you propose in the other 11.75 hours of interviews.