In terms of noise, psychiatry is an extreme case.
Judgment can therefore be described as measurement in which the instrument is a human mind.
And we cannot suppress the powerful intuition that what makes sense in hindsight today was predictable yesterday.
I decided to evaluate my portfolio only once a quarter. I am too loss averse to make sensible decisions in the face of daily price fluctuations.
There is at least one source of occasion noise that we have all noticed: mood.
When physicians are under time pressure, they are apparently more inclined to choose a quick-fix solution, despite its serious downsides.
Scientists in diverse disciplines were quick to adopt the least squares method. Over two centuries later, it remains the standard way to evaluate errors wherever achieving accuracy is the goal.
In areas that involve vague criteria and complex judgments, intrarater reliability, as it is called, can be poor.
Remarkably, altruistic punishment is accompanied by increased activity in the “pleasure centers” of the brain. It appears that maintaining the social order and the rules of fairness in this fashion is its own reward. Altruistic punishment could well be the glue that holds societies together. However, our brains are not designed to reward generosity as reliably as they punish meanness. Here again, we find a marked asymmetry between losses and gains.
The familiarity of one phrase in the statement sufficed to make the whole statement feel familiar, and therefore true.
A correlation of .30 implies that you would find the stronger CEO leading the stronger firm in about 60% of the pairs – an improvement of a mere 10 percentage points over random guessing, hardly grist for the hero worship of CEOs we so often witness.
Judgment is not a synonym for thinking, and making accurate judgments is not a synonym for having good judgment.
Burton Malkiel’s wonderful book A Random Walk Down Wall Street.
When something cement does not fit into the current context of activated ideas, the system detects an abnormality, as you just experienced. You had no particular idea of what was coming after something, but you knew when the word cement came that it was abnormal in that sentence. Studies of brain responses have shown that violations of normality are detected with astonishing speed and subtlety.
We have in our head a remarkably powerful computer, not vast by conventional hardware standards, but able to represent the structure of our world by various types of associative links in a vast network of various types of ideas.
The word fallacy is used, in general, when people fail to apply a logical rule that is obviously relevant.
Most organizations prefer consensus and harmony over dissent and conflict. The procedures in place often seem expressly designed to minimize the frequency of exposure to actual disagreements and, when such disagreements happen, to explain them away.
The primed ideas have some ability to prime other ideas, although more weakly. Like ripples on a pond, activation spreads through a small part of the vast network of associated ideas.
Some judgments are biased; they are systematically off target. Other judgments are noisy, as people who are expected to agree end up at very different points around the target. Many organizations, unfortunately, are afflicted by both bias and noise.
The reliance on flawed explanations is perhaps inevitable, if the alternative is to give up on understanding our world.