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2.4 - Coggle Diagram
2.4
Overconfidence in Judgement
Overconfidence
It occur with experts and novices
"the biggest problem is not what people do not know if they are aware they do not know it, but rather what they think they know that is not true"
Optimism Bias
the tendency to judge the likelihood of good things happening too highly and bad things too low.
Possible Implications
Underestimating time and cost for bids
Planning inadequecies
Employee disappointment & disgruntlement when performance evolutions are lower than expected
Being well-calibrated in judgment is essential for good decision making
It is important to understand why overconfidence and optimism bias occur then we are able to reduce the negative impact of these negative traits.
Beware Online "filter bubbles"
(Eli Pariser, 2011) TED Talk
https://www.ted.com/talks/eli_pariser_beware_online_filter_bubbles
Social media is practicing invisible algorithmic editing of the web
We do not decide what gets out or in to our filter bubble
Bubble filters help reinforce our confirmation bias
The
Representativeness
Heuristics
The tendency to recall existing prototypes from past experiences for the matter in hand
Confirmation Bias
The tendency to seek evidence that confirms our beliefs and neglect disconfirming evidence or the tendency to filter out everything that is not consistent with our beliefs.
Results from quick thinking (Type 1)
Confirmation bias is like a drug, it feels good to confirm our beliefs.
(Wolfgang Munchau, 2017) Financila Times
https://www.ft.com/content/b7d68798-62fb-11e7-91a7-502f7ee26895
A good example of confirmation bias and thinking is
personalised social media newsfeed
Judgement in managerial decision making
(Bazemore et al, 2013) Chapter 2 'overconfidence'
The mother of all biases '
Overconfidence
'
It has been blamed for wars, stock market bubbles, strikes, and failures
Overconfidence has been studied in Three basic ways"
Overestimation
The tendency to think we are better, smarter, faster, more capable, more attractive than we are.
Overplacement
The tendency to falsely think we rank higher than others on certain dimensions, particularly in competitive contexts.
Overprecision
The tendency to be too sure our judgement and decisions are accurate, uninterested in testing our assumption and dismissive of evidence suggesting we are wrong.
The
outcome Bias
Judging a decision to be right or wrong by whether it was successful or not.