Transductive reasoning is the type of flawed logic that very young children commonly use to add meaning between events where there is no connection with adulthood, it takes the form of superstition or is fooled by randomness. Transductive reasoning causes people to think there are connections between events based on past experiences, patterns, or belief systems that are inaccurate.
An example might be that Amazon packages are delivered in the afternoon one morning a box of Amazon arrives a child thinks it’s noon and it’s time for lunch. Another example might be that since pants have stripes and shirts have lines, they match because the patterns are similar, but the colors collide.
Another great example is a child hearing a dog barking and then seeing a train approaching. He concludes that the train comes because the dog barks.
Transductive reasoning is characteristic of children aged 2 to 7 years transductive reasoning can be an essential part of intellectual development this is when the child starts reasoning and tries to make logical cause-and-effect relationships from situations. While the initial false findings may be funny or make parents concerned about intellectual development, it shows that the child’s thinking and executive functions are forming in their brain.
With adults, this forms superstition because bad events on Friday the 13th are seen as correlated with the day of the week and the month. Bad luck is caused by a black cat crossing someone’s path or walking under a ladder. The events have no relation to reality but are connected through transductive reasoning.
In investing, an example of transductive reasoning that is false is the Super Bowl indicator this superstition states that the annual performance of the stock market can be estimated from the outcome of the Super Bowl that year. Leonard Koppett came up with this in the 1970s, and the time he discovered the false correlation had never been wrong in history. This investment signal is given based on the convention from which the NFL team wins the Super Bowl that year. If the AFC wins, it will be a bear market, but if a team from the NFC wins or even a team that was in the NFL before the NFL/AFL merger, it will be a bull market. As of January 2020, this indicator has been correct 40 out of 53 times, with a historical win rate of 75% based on using the S&P 500 Index as its benchmark.
The error in this thinking is caused by being fooled by randomness the biggest problem with this data set is that the NFL and the stock market have zero correlation. Another problem is that the sample size is so tiny that it was easy for any pattern to emerge in the 1970s because the Super Bowl only started in 1967. There is also the fact that the NFC had several dynasties in its conference, such as the Green Bay Packers and Dallas Cowboys and the San Francisco 49ers and the stock market have been bullish for most of the year, making the correlation easy for people to fool.
Also, investing in bull markets doesn’t turn into skill unless you hold those gains during bear markets or hold your holdings long enough to be profitable in the time frame.
The most significant transductive reasoning error in trading occurs when a new trader confuses luck with skill. Making money for days, weeks or months can be attributed to chance, while profiting from year to year for a decade can show business acumen opening a trading account shows that a trader lacks risk management skills.
While a trader on dotcom stocks in the late 1990s may be increasingly lucky, a trader who made most of those profits after March 2000 and September 11, 2001 may have real skill because they had an exit strategy. It was not just one entry.
Being quick about bitcoin doesn’t make a skilled trader or investor if all the other cryptocurrencies they’ve bought have fallen 99% bitcoin may have been a combination of luck in both faith and the time when they purchased it the prowess of a bitcoin bull market will be determined by how much they profit from their profits over the long term. Transductive reasoning is the error of connecting points unrelated to each other. Correct reasoning is to see real cause and effect in reality.
What is Transductive Reasoning Piaget With Examples in Psychology?
As an example of a transductive reasoning Piaget psychologist, it is a child’s tendency in the pre-operational stage of cognitive development to see the relationship between examples using neither deductive nor positive means. For example, children do it correctly. I have not taken my while, so it’s not afternoon.
It is used as another example to give estimates or circuit recipes that are accurate and not accurate based on already known information. Some reasons are that a mail carrier brings mail in the afternoon of the day. The mail comes in the morning, but the child decides that it is noon and I am ready for him to go to swimming lessons, let’s take another example, a person has to go to his office meeting, and he decides that he should If one wants to wear good clothes, he ironing the cloth.
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