Let’s say your favorite coworker quits. This makes you sad, of course. But I think your reaction has two components.
First you’re sad about the direct effects. You won’t get to work with them any more! Something good has left your life.
But I argue you are also reacting to the signal. Why did they leave? Is there something wrong at the company that you don’t know about, or hadn’t weighted appropriately? Are you a sucker for staying behind? You respect their judgment, so you need to update your beliefs accordingly.
Separating these is helpful. I think my reactions are usually dominated by signal considerations, but intuitively it seems that I should care more about direct effects.
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