Expectation

I dropped Monday's class, Theory of Finance, not because it's a bad class -- it's a fine one. I dropped it because it failed to meet my expectations: I expected to get a deeper understanding of finance theories, it turned out to be the same old stuff: consumer theory, expected utility, portfolio theory, CPAM, APT, Options, etc.

Fortunately or unfortunately, this is the way our mind perceives and processes information -- we form expectations and only respond to the deviations from them. From an evolutionary perspective it makes sense in that it economizes our effort for information processing and storage.

In everyday life there are moments we are taken aback by something unexpected, which often leads us to search for the gap in understanding, the missing parts, the implied. Nassiam Taleb says that's all that matters and we should totally disregard the expected. It's through these surprises and shocks and we reshape our expectations, and this adaptive and dynamic process goes on and on.