Noise: A Flaw in Human Judgment

by Daniel Kahneman

Singular decisions have traditionally been treated as quite separate from the recurrent judgments that interchangeable employees routinely make in large organizations. While social scientists have dealt with recurrent decisions, high-stakes singular decisions have been the province of historians and management gurus. The approaches to the two types of decisions have been quite different. Analyses of recurrent decisions have often taken a statistical bent, with social scientists assessing many similar decisions to discern patterns, identify regularities, and measure accuracy. In contrast, discussions of singular decisions typically adopt a causal view; they are conducted in hindsight and are focused on identifying the causes of what happened. Historical analyses, like case studies of management successes and failures, aim to understand how an essentially unique judgment was made.