Wk 8.2: Overconfidence & experimental decisions

K part 3 & 5

Hindsight bias

Say ‘I knew at that time’ although they could not have known

Creeping determinism

Particular outcomes seemed to be more foreseeable than they actually were

Nixon study

After Nixon visited China and Soviet Union students were asked again for the likelihoods of events and were asked to give their original probabilities.

Conclusion Nixon study

Probabilities of POWERPOINT

Outcome bias

We blame decision makers for good decisions that turn out badly and little credit for successful moves

Illusion of vailidity

Confidence did not suffer although the predictions were not moderated

Stock picking skill

i

Illusion of pundits

Hedgehogs versus Foxes

Focused worldview, ideological leaning, strong convictions vs. cautious, centrist, prone to self-doubt

Foxes are more likely to get things right