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November 28 - December 9, 2018
The further out the forecaster tries to look, the more opportunity there is for chaos to flap its butterfly wings and blow away expectations.
For scientists, not knowing is exciting. It’s an opportunity to discover; the more that is unknown, the greater the opportunity.
Good Judgment Project
When physicians finally accepted that their experience and perceptions were not reliable means of determining whether a treatment works, they turned to scientific testing—and medicine finally started to make rapid advances.
It reviewed twenty studies showing that well-informed experts predicting outcomes—whether a student would succeed in college or a parolee would be sent back to prison—were not as accurate as simple algorithms that added up objective indicators like ability test scores and records of past conduct.
the Cognitive Reflection Test, which has shown that most people—including very smart people—aren’t very reflective.
be prepared to accept that what seems obviously true now may turn out to be false later.
As another journalist wrote, when Ballmer announced his departure from Microsoft in 2013, “The iPhone alone now generates more revenue than all of Microsoft.”2
intelligence analysis—the methodical examination of the information collected by spies and surveillance to figure out what it means, and what will happen next.
CERTAINTY THE GENERAL AREA OF POSSIBILITY 100% Certain 93% (give or take about 6%) Almost certain 75% (give or take about 12%) Probable 50% (give or take about 10%) Chances about even 30% (give or take about 10%) Probably not 7% (give or take about 5%) Almost certainly not 0% Impossible
when forecasters are forced to translate terms like “serious possibility” into numbers, they have to think carefully about how they are thinking, a process known as metacognition. Forecasters who practice get better at distinguishing finer degrees of uncertainty, just as artists get better at distinguishing subtler shades of gray.
The only way to know for sure would be to rerun the day hundreds of times. If it rained in 70% of those reruns, and didn’t rain in 30%, she would be bang on.
They talked about possibilities and probabilities, not certainties. And while no one likes to say “I was wrong,” these experts more readily admitted it and changed their minds.
the more famous an expert was, the less accurate he was.
With valid information piling up and errors nullifying themselves, the net result was an astonishingly accurate estimate.
Now look at how foxes approach forecasting. They deploy not one analytical idea but many and seek out information not from one source but many. Then they synthesize it all into a single conclusion. In a word, they aggregate. They may be individuals working alone, but what they do is, in principle, no different from what Galton’s crowd did. They integrate perspectives and the information contained within them. The only real difference is that the process occurs within one skull.
Quit pretending you know things you don’t and start running experiments.
Active open-mindedness (AOM) is a concept coined by the psychologist Jonathan Baron,
People should take into consideration evidence that goes against their beliefs.
beliefs are hypotheses to be tested, not treasures to be guarded.
distinction that philosophers have proposed between “epistemic” and “aleatory” uncertainty.
bafflegab.
So finding meaning in events is positively correlated with wellbeing but negatively correlated with foresight.
Unpack the question into components. Distinguish as sharply as you can between the known and unknown and leave no assumptions unscrutinized. Adopt the outside view and put the problem into a comparative perspective that downplays its uniqueness and treats it as a special case of a wider class of phenomena. Then adopt the inside view that plays up the uniqueness of the problem. Also explore the similarities and differences between your views and those of others—and pay special attention to prediction markets and other methods of extracting wisdom from crowds. Synthesize all these different
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Consider the 1942 argument of General John DeWitt, a strong supporter of the internment of Japanese Americans: “The very fact that no sabotage has taken place to date is a disturbing and confirming indication that such action will be taken.”6—or to put that more bluntly, “The fact that what I expected to happen didn’t happen proves that it will.”
Try, fail, analyze, adjust, try again:
Grit is passionate perseverance of long-term goals, even in the face of frustration and failure. Married with a growth mindset, it is a potent force for personal progress.
Groups that get along too well don’t question assumptions or confront uncomfortable facts.
On the one hand, we warned, groupthink is a danger. Be cooperative but not deferential. Consensus is not always good; disagreement not always bad. If you do happen to agree, don’t take that agreement—in itself—as proof that you are right.
If many people agree with me that a stock is worth more than it’s selling for, they will try to buy it. Increasing demand pushes the price up. In that way, all the individual judgments of the buyers, and all the information guiding those judgments, becomes “priced in.”
Prediction markets are simply markets that trade in predictions, meaning traders buy and sell contracts on specified outcomes—such as “Hillary Clinton will be elected president of the United States in 2016.” When the election of 2016 is held, that contract is settled. If Clinton loses, the contract pays out nothing. If she wins, it pays out $1. If the contract is currently selling for 40 cents and I think Clinton has a 60% or 70% chance of winning, I should buy.
Wharton colleague Adam Grant categorizes people as “givers,” “matchers,” and “takers.”
But Grant’s research shows that the pro-social example of the giver can improve the behavior of others, which helps everyone, including the giver—which explains why Grant has found that givers tend to come out on top.
The more diverse his team, the greater the chance that some advisers will possess scraps of information that others don’t.
Leaders must be reasonably confident, and instill confidence in those they lead, because nothing can be accomplished without the belief that it can be. Decisiveness is another essential attribute. Leaders can’t ruminate endlessly. They need to size up the situation, make a decision, and move on. And leaders must deliver a vision—the goal that everyone strives together to achieve.
“No plan of operations extends with certainty beyond the first encounter with the enemy’s main strength,”
Everyone has a plan until they get punched in the mouth
The art of leadership consists of the timely recognition of circumstances and of the moment when a new decision is required.”
commanders were to tell subordinates what their goal is but not how to achieve it.
What exactly is a black swan? The stringent definition is something literally inconceivable before it happens.
These limits on predictability are the predictable results of the butterfly dynamics of nonlinear systems.
my EPJ research, the accuracy of expert predictions declined toward chance five years out.
If you have to plan for a future beyond the forecasting horizon, plan for surprise. That means, as Danzig advises, planning for adaptability and resilience.
Imagine a scenario in which reality gives you a smack in the ear and consider how you would respond. Then assume reality will give you a kick in the shin and think about dealing with that. “Plans are useless,” Eisenhower said about preparing for battle, “but planning is indispensable.”
Knowing what we don’t know is better than thinking we know what we don’t.
“Not everything that counts can be counted,” goes a famous saying, “and not everything that can be counted counts.”13 In this era of computers and algorithms, some social scientists have forgotten that.
