2 over application of available information diagnoses

Info icon This preview shows pages 8–10. Sign up to view the full content.

View Full Document Right Arrow Icon
2. Over-application of available information (diagnoses based on recency). 3. Bad feedback (lie detection; complex business decisions). 4. Biased feedback; motivated reasoning (political experts; sports gamblers). 5. Learned associations are overgeneralized (stereotypes). Alternatives to intuitive decision making: 1. Experimentation / Pilot Testing 2. Base Rates / Find Similar Cases 3. Statistical Models / Consistently-Applied Decision Rules 4. Aggregating (Independent) Opinions Lecture 11 Why is statistical judgment so consistently better than human judgment? Reliability: How much do two judgments of the same thing correlate with each other? Validity: How much does a judgment correlate with the variable we are trying to predict? It is difficult to have validity without reliability. Create a random model by: 1. Determine the sign of each regression coefficient. 2. Standardize all the variables. 3. Choose a coefficient at random over the range 0 to 1. 4. Use those coefficients to make predictions. Human judges often use information that is not predictive. Human judges often assign non-optimal weights to the criteria. Optimizing is not something that humans are good at – especially when two criteria are somewhat redundant.
Image of page 8

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Caveats 1. The data that is used to create this model must reflect the range of possibilities in the real world. 2. You must have a quantifiable criterion, using quantifiable attribute values. 3. Statistical models don’t often account for “soft”, qualitative attributes that, in some cases, should matter. 4. Diversity is difficult; what if you care about more than one criterion? Ways to Improve Judgment: 1. Improve Reliability 2. Discard Useless Information Takeaways 1. When accurate prediction, diagnosis, and judgment is important, a statistical model will outperform expert judges. 2. Human judges are unreliable, susceptible to influence by factors that should not matter, prone to ignoring factors that should matter, and incapable of optimally weighting the relevant factors. SECOND HALF OF THE SEMESTER Lecture 12 Problems with Group Deliberations 1. Groups are re-affirming 2. Some opinions are not voices 3. Opinions are not independent Averaging opinions often out-performs the vast majority of individual estimates. Reason 1: Judgments are often unreliable, and susceptible to random errors. Averaging often helps to cancel out those random errors. Reason 2: Individual judgments are often biased by one’s own unique perspective or tendencies. Whereas group discussion can amplify such biases, averaging can cancel them out. Potential Problems with Averaging Opinions: Problem 1: In some cases, judges are not independent or diverse. Even if they are physically separate, people may rely on the same sources (media, rumors, beliefs) to make estimates.
Image of page 9
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern