System noise, that is, unwanted variability in judgments that should ideally be identical, can create rampant injustice, high economic costs, and errors of many kinds.
From the perspective of noise reduction, a singular decision is a recurrent decision that happens only once.
Speaking of Singular Decisions “The way you approach this unusual opportunity exposes you to noise.” “Remember: a singular decision is a recurrent decision that is made only once.” “The personal experiences that made you who you are are not truly relevant to this decision.
There is good reason to believe that general intelligence is likely to be associated with better judgment. Intelligence is correlated with good performance in virtually all domains. All other things being equal, it is associated not only with higher academic achievement but also with higher job performance.
Although Humans are not irrational, they often need help to make more accurate judgments and better decisions, and in some cases policies and institutions can provide that help.
He weighs losses about twice as much as gains, which is normal.
We called this reliance on the ease of memory search the availability heuristic.
When a venture capitalist looks for “the next big thing,” the risk of missing the next Google or Facebook is far more important than the risk of making a modest investment in a start-up that ultimately fails.
Matters of judgment, including professional judgments, occupy a space between questions of fact or computation on the one hand and matters of taste or opinion on the other. They are defined by the expectation of bounded disagreement.
The sunk-cost fallacy keeps people for too long in poor jobs, unhappy marriages, and unpromising research projects. I have often observed young scientists struggling to salvage a doomed project when they would be better advised to drop it and start a new one. Fortunately, research suggests that at least in some contexts the fallacy can be overcome. The.
The core of the illusion is that we believe we understand the past, which implies that the future also should be knowable, but in fact we understand the past less than we believe we do. Know is not the only word that fosters this illusion. In common usage, the words intuition and premonition also are reserved for past thoughts that turned out to be true.
Recall that the correlation between two measures – in the present case reading age and GPA – is equal to the proportion of shared factors among their determinants.
A general limitation of the human mind is its imperfect ability to reconstruct past states of knowledge, or beliefs that have changed.
As we have seen, rationality is generally served by broader and more comprehensive frames, and joint evaluation is obviously broader than single evaluation.
Losses are weighted about twice as much as gains in several contexts:.
But of course the main reason that decision theorists study simple gambles is that this is what other decision theorists do. The field had a theory, expected utility theory, which was the foundation of the rational-agent model and is to this day the most important theory in the social sciences.
Prospect theory turned out to be the most significant work we ever did, and our article is among the most often cited in the social sciences.
During the first five years we spent looking at how people make decisions, we established a dozen facts about choices between risky options. Several of these facts were in flat contradiction to expected utility theory. Some had been observed before, a few were new. Then we constructed a theory that modified expected utility theory just enough to explain our collection of observations. That was prospect theory.
Scholars in other disciplines found it useful, and the ideas of heuristics and biases have been used productively in many fields, including medical diagnosis, legal judgment, intelligence analysis, philosophy, finance, statistics, and military strategy.
The essence of the focusing illusion is WYSIATI, giving too much weight to the climate, too little to all the other determinants of well-being.