Tyler Cowen: Underappreciated Economist E. Glen Weyl
Tyler Cowen writes:
Marginal Revolution: Underappreciated economists: a continuing series: Today I will pick E. Glen Weyl, a mere Youngling, who is studying at Princeton University. Here is his paper on neural networks, and the abstract:
I consider a potential neural basis of overconfidence, the well-documented tendency of individuals to overestimate the precision of their predictions. I present a simple, classic connectionist model for predicting a binary variable. I show that while the network initially makes weak predictions (in the middle of the probability range) regardless of input, after observing randomly generated data it learns to be overconfident in the sense that when presented with other, unrelated random data it makes strong predictions. The model matches behavioral data in that it shows overconfidence growing with experience and then, eventually, declining. The model shows how overconfidence, far from being a surprising fallacy, can be seen as a natural outgrowth of statistical over-fitting in the brain.
Glen probably won't be underappreciated for long. Here is his seminal paper on two-sided markets (e.g., Match.com). There is already talk he will be a leading economist of the next generation...