Noise: A Flaw in Human Judgment

by Daniel Kahneman

Only a statistical view of the world enables us to see noise, but that view does not come naturally—we prefer causal stories.

This is understandable; from an organizational perspective, noise is an embarrassment.

This observation leads to a conclusion that will be as unpopular as it is inescapable: judgment is not the place to express your individuality.

The outside view is a remedy for this problem: professionals who share the same reference class will be less noisy. In addition, the outside view often yields valuable insights.

Whenever possible, independence is protected by assigning assessments to different teams and minimizing communication among them.

Resist premature intuitions. We have described the internal signal of judgment completion that gives decision makers confidence in their judgment.