| Core Concept |
| Regression to the mean, formulated by Francis Galton 1883
States that over time the average tends to dominate
Also known as convergence
Found in nonlinear systems as attractors |
| Consequences |
| In decision-making avoid extrapolating recent information too much
"Form is temporary, class is permanent" |
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| Caveats |
| Shocks can disturb the trend of regression
Regression can overshoot the mean
The mean can be dynamic (a new mean can emerge) |
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