Experts Get It Wrong
We at Mobus Creative Negotiating have made much use of the work of
economics Nobel Prize winner Daniel Kahneman, a Princeton psychologist.
Our recent blog drew from his new book, *Noise: A Flaw in Human Judgment*,
written with Olivier Sibony and Cass Sunstein, to discuss how group-think
can lead us astray.
Now let’s look at what is the most surprising lesson Kahneman and company
offers. They draw on a whole host of studies which show that experts’
predictions are worse than forecasts made using simple rules. They
describe why this result offends us: “For most of us, the activity of
judgment is complex, rich, and interesting precisely because it does not
fit simple rules.” Sorry, but that is wrong.
Here is one example a study making that point. Martin Yu and Nathan Kuncel
looked at 847 candidate interviews by an international consulting firm,
which assessed the candidates on seven dimensions. They compared that to
random weights they generated for the seven predictors for 10,000
“candidates.” In 77% of the cases, the random weights more accurately
predicted the outcome than did the experts.
Perhaps the most famous quote about this comes from Princeton’s Burton
Malkiel, who in his 1973 book *A Random Walk Down Wall Street*, wrote: “A
blindfolded monkey throwing darts at a newspaper’s financial pages could
select a portfolio that would do just as well as one carefully selected by
It is painful to admit that mechanical adherence to a simple rule – what Yu
and Kuncel call “mindless consistency” – is the best approach to a
difficult problem. As Kahneman and his co-authors explain, once we start
making judgments based on our expertise, we let in a lot of extraneous
factors – “noise” is their term – which makes for worse results.
They are quick to admit that applying those simple rules does not make for
very good results. The rules rarely work two-thirds of the time. While
that is better than the experts’ judgments, it is not necessarily good
enough to make a compelling case. Hence the temptation to substitute your
We at Mobus Creative Negotiating offer advice for how to mix simple rules
with expert judgment. We show that people are not automatons: our pride
and self-confidence often lead us to follow what we think is best despite
what the simple rule says. That is not going to change, but we at Mobus
Creative Negotiating recommend ways to channel and contain that impulse.