A field of human endeavor we have studied for many years, links after the jump.
From the Stumbling and Mumbling blog:
The strong demand for charlatans
In the improbable event of ever being invited to give a commencement address, my advice to graduates wanting a lucrative career would be: become a charlatan. There has always been a strong demand for witchdoctors, seers, quacks, pundits, mediums, tipsters and forecasters. A nice new paper by Nattavudh Powdthavee and Yohanes Riyanto shows how quickly such demand arises.
They got students in Thailand and Singapore to bet upon a series of five tosses of a fair coin. They were given five numbered envelopes, each of which contained a prediction for the numbered toss. Before the relevant toss, they could pay to see the prediction. After the toss, they could freely see the prediction.
The predictions were organized in such a way that after the first toss half the subjects saw an incorrect prediction and half a correct one, after the second toss a quarter saw two correct predictions, and so on. The set-up is similar to Derren Brown's The System, which gave people randomly-generated tips on horses, with a few people receiving a series of correct tips.
And here's the thing. Subjects who saw just two correct predictions were 15 percentage points more likely to buy a prediction for the third toss than subjects who got a right and wrong prediction in the earlier rounds. Subjects who saw four successive correct tips were 28 percentage points more likely to buy the prediction for the fifth round....MORE
HT: FT Alphaville
The old stock market newsletter scam was to buy a list of names and tell half the people the market would be up and half that it would be down. Do that with a 10,000 name mailing list, cull the ones you were wrong on, rinse and repeat a couple more times and you have 1250 people who think you've been right three times in a row.
What would they be willing to pay for your fourth hot call?
As an example, targeting high net worth individuals, some of the scamsters would sell a subscription to the "Bull" Report or the "Bear" Report for 500 dollars. If a quarter of the final winnowing bought the take was $156,000 which was real money in say 1955, a time when median family income was $4,400 and a postage stamp cost 3 cents....
For further study: