Noise: A Flaw in Human Judgment

by Daniel Kahneman

To summarize this short tour of mechanical decision making, we review two reasons for the superiority of rules of all kinds over human judgment. First, as described in chapter 9, all mechanical prediction techniques, not just the most recent and more sophisticated ones, represent significant improvements on human judgment. The combination of personal patterns and occasion noise weighs so heavily on the quality of human judgment that simplicity and noiselessness are sizable advantages. Simple rules that are merely sensible typically do better than human judgment. Second, the data is sometimes rich enough for sophisticated AI techniques to detect valid patterns and go well beyond the predictive power of a simple model. When AI succeeds in this way, the advantage of these models over human judgment is not just the absence of noise but also the ability to exploit much more information.