Yearly Archives: 2025

Why Daniel Gets the Bonus and John Gets Fired: Simpson’s Paradox on a Trading Desk

Simpson’s paradox in trading illustrated by a tense trading desk evaluating employee performance metrics.
Simpson's Paradox in Action

A deceptively simple win‑rate table leads a trading desk to fire its crisis specialist and reward the safe player. Simpson’s paradox shows how aggregated performance can lie—and why serious risk management must always ask, “conditioned on what?”

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Daniel Plays a Nearly Fair Game and Still Goes Broke: The Math of Ruin

Depiction of a roulette table, tense atmosphere, and a pair of hands playing at the table of a high stakes game. It is derived from gambler's ruin in finance.
Gambler's Ruin

Daniel sits down with 10 million against the casino’s 90 million and plays a nearly fair game—winning 49% of the time, losing 51%. Small edges and capital asymmetry policies quietly convert volatility into an almost certain blow‑up.

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