Convert your principles into algorithms and have the computer make decisions alongside you (20) - Incrium

At some point I want to create an implementation of this. Dalio likely already has something for this but it's not clear to me that there's any decent publicly usable implementation.

Below is from principles by Ray Dalio:

5.11 Convert your principles into algorithms and have the computer make decisions alongside you.

If you can do that, you will take the power of your decision making to a whole other level. In many cases, you will be able to test how that principle would have worked in the past or in various situations that will help you refine it, and in all cases, it will allow you to compound your understanding to a degree that would otherwise be impossible. It will also take emotion out of the equation. Algorithms work just like words in describing what you would like to have done, but they are written in a language that the computer can understand. If you don’t know how to speak this language, you should either learn it or have someone close to you who can translate for you. Your children and their peers must learn to speak this language because it will soon be as important or more important than any other language.

By developing a partnership with your computer alter ego in which you teach each other and each do what you do best, you will be much more powerful than if you went about your decision making alone. The computer will also be your link to great collective decision making, which is far more powerful than individual decision making, and will almost certainly advance the evolution of our species.


In the future, artificial intelligence will have a profound impact on how we make decisions in every aspect of our lives—especially when combined with the new era of radical transparency about people that’s already upon us. Right now, whether you like it or not, it is easy for anyone to access your digital data to learn a tremendous amount about what you’re like, and this data can be fed into computers that do everything from predict what you’re likely to buy to what you value in life. While this sounds scary to many people, at Bridgewater we have been combining radical transparency with algorithmic decision making for more than thirty years and have found that it produces remarkable results. In fact, I believe that it won’t be long before this kind of computerized decision making guides us nearly as much as our brains do now.

The concept of artificial intelligence is not new. Even back in the 1970s, when I first started experimenting with computerized decision making, it had already been around for nearly twenty years (the term “artificial intelligence” was first introduced in 1956 at a conference at Dartmouth College). While a lot has changed since then, the basic concepts remain the same.

To give you just one ultrasimple example of how computerized decision making works, let’s say you have two principles for heating your home: You want to turn the heat on when the temperature falls below 68 and you want to turn the heat off between midnight and 5:00 a.m. You can express the relationship between these criteria in a simple decision-making formula: If the temperature is less than 68 degrees and the time is not between 5:00 a.m. and midnight, then turn on the heat.

By gathering many such formulas, it’s possible to create a decision-making system that takes in data, applies and weighs the relevant criteria, and recommends a decision. THINKING -> PRINCIPLES -> ALGORITHMS

Specifying our investment decision-making criteria in algorithms and running historical data through them, or specifying our work principles in algorithms and using them to aid in management decision making, are just bigger and more complicated versions of that smart thermostat. They allow us to make more informed and less emotional decisions much faster than we could on our own.

I believe that people will increasingly do this and that computer coding will become as essential as writing. In time, we will use machine assistants as much for decision making as we do for information gathering today. As these machines help us, they will learn about what we are like—what we value, what our strengths and weaknesses are—and they will be able to tailor the advice they give us by automatically seeking out the help of others who are strong where we are weak. It won’t be long before our machine assistants are speaking to others’ machine assistants and collaborating in this way. In fact, that’s beginning to happen already.

Imagine a world in which you can use technology to connect to a system in which you can input the issue you’re dealing with and have exchanges about what you should do and why with the highest-rated thinkers in the world. We’ll soon be able to do this. Before too long, you will be able to tap the highest-quality thinking on nearly every issue you face and get the guidance of a computerized system that weighs different points of view. For example, you will be able to ask what lifestyle or career you should choose given what you’re like, or how to best interact with specific people based on what they’re like. These innovations will help people get out of their own heads and unlock an incredibly powerful form of collective thinking. We are doing this now and have found it way better than traditional thinking.

While this kind of view often leads to talk of artificial intelligence competing with human intelligence, in my opinion human and artificial intelligence are far more likely to work together because that will produce the best results. It’ll be decades—and maybe never—before the computer can replicate many of the things that the brain can do in terms of imagination, synthesis, and creativity. That’s because the brain comes genetically programmed with millions of years of abilities honed through evolution. The “science” of decision making that underlies many computer systems remains much less valuable than the “art.” People still make the most important decisions better than computers do. To see this, you need look no further than at the kinds of people who are uniquely successful. Software developers, mathematicians, and game-theory modelers aren’t running away with all the rewards; it is the people who have the most common sense, imagination, and determination.

Only human intelligence can apply the interpretations that are required to provide computer models with appropriate input. For example, a computer can’t tell you how to weigh the value of the time you spend with your loved ones against the time you spend at work or the optimal mix of hours that will provide you with the best marginal utilities for each activity. Only you know what you value most, who you want to share your life with, what kind of environment you want to be in, and ultimately how to make the best choices to bring those things about. What’s more, so much of our thinking comes from the subconscious in ways we don’t understand, that thinking we can model it fully is as unlikely as an animal that has never experienced abstract thinking attempting to define and replicate it.

Yet at the same time, the brain cannot compete with the computer in many ways. Computers have much greater “determination” than any person, as they will work 24/7 for you. They can process vastly more information, and they can do it much faster, more reliably, and more objectively than you could ever hope to. They can bring millions of possibilities that you never thought of to your attention. Perhaps most important of all, they are immune to the biases and consensus-driven thinking of crowds; they don’t care if what they see is unpopular, and they never panic. During those terrible days after 9/11, when the whole country was being whipsawed by emotion, or the weeks between September 19 and October 10, 2008, when the Dow fell 3,600 points, there were times I felt like hugging our computers. They kept their cool no matter what.

This combination of man and machine is wonderful. The process of man’s mind working with technology is what elevates us—it’s what has taken us from an economy where most people dig in the dirt to today’s Information Age. It’s for that reason that people who have common sense, imagination, and determination, who know what they value and what they want, and who also use computers, math, and game theory, are the best decision makers there are. At Bridgewater, we use our systems much as a driver uses a GPS in a car: not to substitute for our navigational abilities but to supplement them.




Ray Dalio




** [12474](SuperMemoElementNo=(12474))**: 5.11 Convert your principles into algorithms and have the computer make decisions alongside you. If you can do that, you will take the power of your decision making to a whole .

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