Ongoing comments - Part 3 - Overconfidence
Chapter 19 - The Illusion of Understanding.
Inability to reconstruct beliefs and past beliefs leads to hindsight bias, outcome bias which can and does lead to risk aversion and can increase the reputation of gamblers. The impact of luck tends to be underestimated in judgment and decision making.
Chapter 20 - The Illusion of Validity page 212 These are cognitive illusions such as the illusion of skill or validity and a nice illustration with stock pickers.
2 of these
Chapter 21 - Intutions v Formulas -
Page 224 "experts inferior to algorithims" example - page 226 marital stability is a function of frequency of lovemaking - frequency of quarrels" and . . . you don't want a negative number.
Chapter 22 Expert Intuiton: When can we Trust it?
Intuition as recognition - the firefighter example. The environment of skill and cognitive ease and coherence. (239)
Conditions to trust
environment that is regular and predictable
prolonged practice to learn the regularities
Chapter 23 - The Outside View - planning fallacy
Chapter 24 - The Engine of Capitalism
The role of confidence, the impact of overconfidence, the costs and benefits of overconfidence in the short and long run.
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