Noise: A Flaw in Human Judgment

by Daniel Kahneman

“We think we understand what is going on here, but could we have predicted it?”

In short, what do we know about the psychology of noise?

We show how these heuristics cause predictable, directional errors (statistical bias) as well as noise.

matching—a particular operation of System 1—

the scale on which the judgments are made.

patterns of responses that different people have to different cases.

effects are not easily predictable.

why is noise, despite its ubiquity, rarely considered an important problem?

This book extends half a century of research on intuitive human judgment, the so-called heuristics and biases program.

Thinking, Fast and Slow,

psychological mechanisms that explain both the marvels and the flaws ...

System 1 thinking, are quite useful and yield adequate answers.

sometimes they lead to biases,

heuristics and biases program focused on what peopl...

processes that cause judgment errors are ...

assume that it always produces statistical bias,

psychological biases create statistical bias when they are broadly shared.

psychological biases always create error.

Judgment biases are often identified by reference to a true value.

familiar psychological bias is known as the planning fallacy.

panel 1, the shots of the two teams differ, although they should be identical.

If these irrelevant details make a difference in the investors’ judgment, there is psychological bias.

Since the teams were aiming at different targets, the clusters of shots should be distinct, but they are centered on the same spot.

answers should be clearly different, but they are not, suggesting that a factor that should influence judgments is ignored. (This psychological bias is called scope insensitivity.)

all psychological biases cause both statistical bias and noise.

These statements mean nothing more than “mistakes were made” and “we will try hard to do better.”

recommend reserving the word bias for specific and identifiable errors and the mechanisms that produce them.

similarity and probability are actually quite different.

theory of judgment heuristics proposes that people will sometimes use the answer to an easier question in responding to the harder one.

substitution of one question for the other causes predictable errors, called psychological biases.

probability is constrained by a special logic.

Venn diagrams apply only to probability, not to similarity.

base-rate information

You think statistically about the class, instead of thinking causally about the focal case.

base-rate neglect.

judgment of risk should be based on a long-term average.

Substituting a judgment of how easily examples come to mind for an assessment of frequency is known as the availability heuristic.

incorrect weighting of the evidence inevitably results in error.

substituting similarity for probability leads to neglect of base rates,

irrelevant variations in the aesthetics

should be given little or no weight in assessing the v...

conclusion bias, or prejudgment.

System 2 thinking—engaging in deliberate thought—

because of confirmation bias and desirability bias, we will tend to collect and interpret evidence selectively to favor a judgment that, respectively, we already believe or wish to be true.

Prejudgments

often have an emotional component.

affect heuristic: people determine what they think by consult...

conclusion bias

anchoring effect,

Social Security number should not have a large effect on your judgment about how much a bottle of wine is worth, but it does.