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OPIM 290 STUDY GUIDE

Require authors to adhere to disclosure standards for

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Require authors to adhere to disclosure standards For example, they must report everything they measured and every condition they ran. Lecture 8 Overconfidence Unwarranted confidence, typically arising from many of the decision making errors we’ve already discussed in this course. People’s confidence intervals for their estimates of unknown quantities tend to be too narrow. We don’t appreciate how much we don’t know. Causes of Overconfidence Availability: We tend to imagine paths to success but not paths to failure. Anchoring: We anchor on our best (optimistic) forecast and adjust insufficiently for realistic constraints. Failure to appreciate the role of chance: We tend to think the world is more controllable & predictable than it is. Biases of knowledge & perspective: We tend to focus on our own abilities while neglecting the competition. Motivated reasoning: We rationalize that success is likely and failure is not. We are frequently rewarded for overconfidence. Real Learning Requires GOOD Feedback! Feedback Must Be: 1. Precise 2. Timely
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3. Repeated The real world often provides very noisy/imprecise feedback. This allows us to interpret data the way that we want to interpret it, which reinforces our initial predictions. Planning Fallacy People underestimate how long it will take them (but not others) to complete tasks – EVEN when they know that such tasks usually run late. 1. It is often easy to imagine a positive scenario. 2. We ask “how will I accomplish this?” not “how won’t I accomplish this?” 3. Focus on intentions rather than obstacles. 4. Fail to consider base rates. 5. Consider past failures “unlucky”, “unusual”, or “irrelevant.” Inside view: Focuses on task’s unique features Imagine how the event will unfold If imagining is easy (and it usually is), then overconfidence Outside view: Focuses on similarity between this task and past tasks Rely on base rates to make predictions More accurate planning Lecture 9 Emotional/Intuitive reactions precede more rational assessments. Emotional/Intuitive reactions can influence behavior to a greater degree than more rational assessments. Intuitive System Deliberative System • Fast/Automatic • Emotional • Grounded in Associations/Experience • Simplifying • Slow •Cognitive/Deliberative • Abstract Knowledge Matters • More Complete/Integrating Lecture 10 It matters what you name things. Feelings are usually more compelling than other information.
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Visceral feelings change your desires…and they lead to poor predictions of what you will want when. Intuition A feeling or belief of an unknown origin Intuition is good when people have repeated experience in a domain that: 1. Provides near-perfect, immediate, unbiased feedback 2. Doesn’t change in an important way Intuition goes bad when: 1. Emotional attributes are misleading (attractive job candidates).
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