Escolar Documentos
Profissional Documentos
Cultura Documentos
Hope
Cognitive and social psychologists have worked for years to understand these problems New scientific knowledge allows us to pinpoint our
COGNITIVE BIASES
For each of the following ten items, provide a low and high guess such that you are 90 percent sure the correct answer falls between the two. Your challenge is to be neither too narrow (i.e., overconfident) nor too wide (i.e., under confident). If you successfully meet this challenge you should have 10 percent misses that is, exactly one miss.
Low
1. What is the weight of an empty Airbus A340-600 (in kilograms or tons?)
High
2. In what year did John Steinbeck win the Nobel Prize for literature?
3. What is the distance (in kilometers or miles) from the Earth to the Moon? 4. What is the air distance (in kilometers or miles) from Madrid to Baghdad? 5. In what year was the construction of the Roman Coliseum completed? 6. What is the height (in meters or feet) of the Aswan High Dam? 7. In what year did Magellans crew complete the first naval circumnavigation of the globe? 8. In what year was Mohandas K. Gandhi born? 9. What is the surface area (in square kilometers or miles) of the Mediterranean Sea? 10. What is the gestation period of the great blue whale?
* Winning Decisions, by Russo and Schoemaker (2002)
Overconfidence
Having a greater degree of confidence in ones knowledge, forecasts, etc. than is justified
Thinking you will be correct more often than you
are
Overconfidence
Percentage of Misses
Ideal Target
2%
Actually Observed
46%
10%
50% 5% 5% 0-20%
50%
79% 80% 58% 82%
Overconfidence
82% of people say they are in the top 30% of safe drivers 86% of Harvard Business School MBAs say they are better
looking than their classmates 68% of lawyers in civil cases believe that their side will prevail
Project management
Almost all cost estimates for construction projects
exceed initial estimates by at least 20% (the median is 100%) Overconfident to finish on time
by the arbiter
There is no correlation between how confident a person is (or how confident he or she appears to be) and accuracy.
always better than an individual judgment The Wisdom of Crowds Collect other opinions Averaging even 1 other option with yours is an improvement Averaging even your own 2nd opinion with your 1st opinion is an improvement
implementation
Be contrarian
Ask yourself why might I be wrong?
Dont demand high confidence and narrow intervals from others Try to better calibrate your metaknowledge
Practice and look for feedback Keep a decision-diary
Decision Diary
Date Decision to be Made Decision Process Used Definition of Success Date for Evaluation Evaluation Learnings
COGNITIVE BIASES
Framing
A story is told about two monks who were heavy smokers. Concerned that smoking was inconsistent with their commitment to a life of prayer and devotion, they decided to ask their prefect for guidance. The first asked, Father, would it be permitted to smoke while I am praying to the Lord?
The answer was a resounding no.
The second asked, Father, when in moments of weakness I smoke, would it be permitted to say a prayer to the Lord? Yes, the prefect replied, of course!
Framing
Frames draw attention to certain
aspects of a problem, while leaving others in the shadows, hidden from our view
Mindset or mental model: simplifies
You are the CEO of a Fortune 500 company faced with a difficult choice. Due to structural changes in the economy that seem irreversible, one of the divisions of your company is threatened with a partial, and possibly a complete, shutdown. This division currently employs 6000 workers. Your staff has identified two options. Option A entails a partial shutdown and the permanent layoff of some of the workers. Option B entails taking a gamble that will result in either 0 or 6000 jobs. Specifically, the two options are as follows:
A: 86% B: 14%
Facing gains, so risk averse
Version 1 Option A : exactly 2000 jobs saved. Option B : 1/3 probability 6000 jobs saved and a 2/3 probability 0f no jobs saved.
Version 2 Option A : exactly 4000 jobs lost. Option B : 1/3 probability 0f no jobs lost and a 2/3 probability 6000 jobs lost.
A: 55% B: 45%
Facing losses, so risk seeking
customers)
What frames affect decisions where you work? What remedies could you use?
COGNITIVE BIASES
Anchoring Bias
Mean: 2018 m 2.0billion
Version 1
What is your best guess of the annual Australian egg production (in millions)? ____________
Euro/USD exchange above or below 1.6 Mean: 41.2 billion Version 2 What is your best guess of the annual Australian egg production (in billions)? ____________
1.5
Actual production:
2.44 Billion
Anchoring Bias
Often observed in
Project Completion Time Estimates
Sale Estimates Budgeting Resourcing projects
How might anchors affect the valuation decisions that you make at work?
COGNITIVE BIASES
Grade Level
Confirmation bias
Preference for information that is
consistent with beliefs rather than information that goes against beliefs
More likely to draw conclusions that suggest
Positive outcomes
Support for pre-existing beliefs
Remedies
Similar to overconfidence remedies Generate alternative hypotheses
Look for both confirming and disconfirming evidence At least temporarily, pretend others are right (even if you dont think they are)
Further Reading