Survivorship Bias: The Tale of Forgotten Failures
Survivorship bias is a common logical error that distorts our understanding of the world. It happens when we assume that success tells the whole story and when we don’t adequately consider past …
Insensitivity to base rates
The Inside View and Making Better Decisions
When we don’t think about the process we use to make decisions, they tend to get worse over time as we fail to learn from experience. Often, we make decisions based on the information that is easiest …
Fooled By Randomness: My Notes
I loved Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Taleb. This is the first popular book he wrote, the book that helped propel him into an intellectual …
This Time is Different: The Four Most Costly Words Ever Spoken
When we look at situations we’re always looking for what’s unique. We should, however, give more thought to similarities. “This time is different” could be the 4 most costly …
Avoiding Ignorance
This is a continuation of two types of ignorance. You can’t deal with ignorance if you can’t recognize its presence. If you’re suffering from primary ignorance, it means you probably …
A Decision-Making Magic Trick
Two important nuggets from an interview with Chip Heath, co-author of Decisive (more here), on improving our ability to make better decisions: A decision-making magic trick The closest thing to a …
Michael Mauboussin: Three Things to Consider in Order To Make an Effective Prediction
Michael Mauboussin commenting on Daniel Kahneman: When asked which was his favorite paper of all-time, Daniel Kahneman pointed to “On the Psychology of Prediction,” which he co-authored with Amos …
Insensitivity To Base Rates: An Introduction
In statistics, a base rate refers to the percentage of a population (e.g. grasshoppers, people who live in New York, newborn babies) which have a characteristic. Given a random individual and no …
Choice Under Uncertainty
We use heuristics – rules of thumb – to make judgments. These can lead to certain predictable biases. These can lead to certain predictable biases. For instance, we classify situations …