From e21f162e48983ddd72a430c544ada1e7927863d7 Mon Sep 17 00:00:00 2001
From: Celes Renata <celes@frameshift.net>
Date: Fri, 17 Apr 2026 03:41:39 +0000
Subject: [PATCH] fix: dampen agreement factor by sample size in trend
 confidence to prevent low-evidence inflation
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Agreement of 1-2 signals was inflating confidence to paper-eligible
levels (0.575) even with low credibility sources. Added log2-based
dampener that scales agreement contribution by unique source count,
saturating at n=7. Single signals now cap at 0.39 confidence,
2 signals at 0.49 — both correctly below paper threshold (0.50).
---
 services/aggregation/worker.py         | 11 ++++++++++-
 tests/test_paper_trading_simulation.py | 18 +++++++++---------
 2 files changed, 19 insertions(+), 10 deletions(-)

diff --git a/services/aggregation/worker.py b/services/aggregation/worker.py
index 929acc2..4e3f66d 100644
--- a/services/aggregation/worker.py
+++ b/services/aggregation/worker.py
@@ -10,6 +10,7 @@ from __future__ import annotations
 
 import json
 import logging
+import math
 import time
 import uuid as _uuid
 from dataclasses import dataclass
@@ -582,7 +583,9 @@ def compute_trend_confidence(
     Confidence is based on:
     - Number of UNIQUE source documents (not raw signal count)
     - Average extraction confidence of contributing signals
-    - Signal agreement (what fraction point the same direction)
+    - Signal agreement (what fraction point the same direction),
+      dampened by sample size so that 1-2 signals agreeing doesn't
+      inflate confidence the same way 10+ signals agreeing does
     - Contradiction penalty (high contradiction lowers confidence)
 
     Returns a value in [0, 1].
@@ -611,6 +614,12 @@ def compute_trend_confidence(
     else:
         agreement = 0.5
 
+    # Dampen agreement by sample size: 1-2 signals agreeing is far less
+    # meaningful than 7+ signals agreeing.  Uses log2(n+1)/log2(8) so the
+    # dampener saturates at 1.0 around n=7 unique sources.
+    agreement_dampener = min(1.0, math.log2(unique_sources + 1) / math.log2(8))
+    agreement *= agreement_dampener
+
     # Contradiction penalty
     contradiction_penalty = contradiction_score * 0.4
 
diff --git a/tests/test_paper_trading_simulation.py b/tests/test_paper_trading_simulation.py
index b0c5020..9037805 100644
--- a/tests/test_paper_trading_simulation.py
+++ b/tests/test_paper_trading_simulation.py
@@ -426,11 +426,11 @@ class TestRecommendationDrivenOrders:
         impacts = [
             ImpactRow(
                 document_id="doc-weak-1",
-                confidence=0.20,
-                novelty_score=0.1,
-                source_credibility=0.2,
+                confidence=0.40,
+                novelty_score=0.3,
+                source_credibility=0.5,
                 sentiment="positive",
-                impact_score=0.1,
+                impact_score=0.3,
                 catalyst_type="other",
                 key_facts=["Minor update"],
                 risks=[],
@@ -438,11 +438,11 @@ class TestRecommendationDrivenOrders:
             ),
             ImpactRow(
                 document_id="doc-weak-2",
-                confidence=0.15,
-                novelty_score=0.1,
-                source_credibility=0.2,
-                sentiment="negative",
-                impact_score=0.1,
+                confidence=0.35,
+                novelty_score=0.2,
+                source_credibility=0.4,
+                sentiment="positive",
+                impact_score=0.25,
                 catalyst_type="other",
                 key_facts=["Routine filing"],
                 risks=[],