Michael Mauboussin's book
The Success Equation
describes how you distinguish skill from luck.
"There's a quick and easy way to test whether an activity involves skill; ask
whether you can lose on purpose. In games of skill, it's clear that you can
lose intentionally but when playing roulette or the lottery you can't lose on
purpose."
This is a good initial rule of thumb but is too simple when it comes to
business. Usually there is a healthy dose of both luck and skill involved. Ask
Alan Greenspan or Jack Welch.
Typically our biases convince us that it was skill when we succeed and bad
luck when we fail.
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