Noise: A Flaw in Human Judgment

by Daniel Kahneman

This theoretical discussion matters. If singular decisions are just as noisy as recurrent ones, then the strategies that reduce noise in recurrent decisions should also improve the quality of singular decisions. This is a more counterintuitive prescription than it seems. When you have a one-of-a-kind decision to make, your instinct is probably to treat it as, well, one of a kind. Some even claim that the rules of probabilistic thinking are entirely irrelevant to singular decisions made under uncertainty and that such decisions call for a radically different approach. Our observations here suggest the opposite advice. From the perspective of noise reduction, a singular decision is a recurrent decision that happens only once. Whether you make a decision only once or a hundred times, your goal should be to make it in a way that reduces both bias and noise. And practices that reduce error should be just as effective in your one-of-a-kind decisions as in your repeated ones.