Noise: A Flaw in Human Judgment

by Daniel Kahneman

It should be clear at the outset that whenever firms, organizations, societies, or groups are sharply divided, it might be far easier to generate standards than rules.

That is the problem with authors' aspiration of elimination of noise, it would requiere a homogeneous society.

The leaders of a company might be unable to agree on specific words to govern how employees must deal with customers. Standards might be the best that such leaders can do. There are analogies in the public sector.

private and public spheres are totally different. In private you can put a rule and demand employee to comply or take disciplinary actions. In public, you shouldn't hinder people's freedom in order to have a consistent outcome.

Or it might tell its employees to enforce a standard (such as forbidding bullying or patently offensive materials).

Twitter advice not to open comments because potentially violent, when they were just in favor of the original tweet, that twitter couldn't ban.

Principals need to impose rules when they have reason to distrust their agents. If agents are incompetent or biased and if they cannot feasibly implement decision hygiene, then they should be constrained by rules.

Without such rules, and with open-ended standards, the costs of decisions tend to become impossibly large.

In many situations, noise should be a scandal. People live with it, but they should not have to do that.

Moral judgement.

noise can be counted as a rights violation, and in general, legal systems all over the world should be making much greater efforts to control noise.

judgment is a form of measurement in which the instrument is a human mind.

As measured by MSE, bias and noise are independent and additive sources of error. Obviously, bias is always bad and reducing it always improves accuracy. Less intuitive is the fact that noise is equally bad and that reducing noise is always an improvement.

The surprises that motivated this book are the sheer magnitude of system noise and the amount of damage that it does. Both of these far exceed common expectations.

It is unfair for similarly situated people to be treated differently, and a system in which professional judgments are seen as inconsistent loses credibility.

Is it unfair if everyone has an equal chance of being treated unfairly ?

People’s exaggerated confidence in their predictive judgment underestimates their objective ignorance as well as their biases.

Bias has a kind of explanatory charisma, which noise lacks. If we try to explain, in hindsight, why a particular decision was wrong, we will easily find bias and never find noise. Only a statistical view of the world enables us to see noise, but that view does not come naturally—we prefer causal stories.

Attention to the wide range of past outcomes

Intuition need not be banned, but it should be informed, disciplined, and delayed.

Decision hygiene practices also have their downsides: if poorly managed, they risk bureaucratizing decisions and demoralizing professionals who feel their autonomy is being undermined.