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Daniel Kahneman: Beware the ‘inside view’

In an excerpt from his new book, Thinking, Fast and Slow, the Nobel laureate recalls how an inwardly focused forecasting approach once led him astray, and why an external perspective can help executives do better.

beware the inside view article, inside view ignores unanticipated events, Strategy

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In the 1970s, I convinced some officials in the Israeli Ministry of Education of the need for a curriculum to teach judgment and decision making in high schools. The team that I assembled to design the curriculum and write a textbook for it included several experienced teachers, some of my psychology students, and Seymour Fox, then dean of the Hebrew University’s School of Education and an expert in curriculum development.

After meeting every Friday afternoon for about a year, we had constructed a detailed outline of the syllabus, written a couple of chapters, and run a few sample lessons. We all felt we had made good progress. Then, as we were discussing procedures for estimating uncertain quantities, an exercise occurred to me. I asked everyone to write down their estimate of how long it would take us to submit a finished draft of the textbook to the Ministry of Education. I was following a procedure that we already planned to incorporate into our curriculum: the proper way to elicit information from a group is not by starting with a public discussion, but by confidentially collecting each person’s judgment. I collected the estimates and jotted the results on the blackboard. They were narrowly centered around two years: the low end was one and a half, the high end two and a half years.

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