Noise - Part I - Finding Noise
Do you realize how seriously your organization is affected by bad decisions? There are two types of errors in human judgments: Bias and Noise. Bias is a very widely recognized problem, and you definitely heard about it. Noise is not so widely recognized. Yet, it affects MANY decisions in ALL the industries.
There is a huge Noise in government decisions. There is a huge Noise in commercial companies.
Noise can be made visible and can be reduced. It is harder to measure the noise in unique singular decisions, but it is still there and it still can be reduced.
In January, together with the Rational Answer books club, I am reading a new book from the Nobel Prize-winning author of “Thinking, Fast and Slow” and the coauthor of “Nudge”, a revolutionary exploration of why people make bad judgments and how to make better ones—“a tour de force”
I share the overview and mind-map of the Part I - it opens the topic of Noise:
- About two types of errors in human judgments: Bias and Noise.
- Generally: wherever there is judgment, there is noise‚ and MORE of it than you think.
- Chapter 1. Crime and Noisy Punishment. You wouldn’t believe how badly judges decisions are affected by Noise.
- For the same crime with the same circumstances there could be given 117 days of prison or 20 years of prison!
- Chapter 2. A Noisy System. Many commercial companies, such as insurance companies, are seriously affected by the noise, and they are losing a lot of money. This noise can be made visible to the management of the company and can be reduced.
- Chapter 3. Singular Decisions. If decision is unique because of unique nature of the project/case then it is harder to measure the noise.
- But we know for sure that the Noise still exists and we can use the same remedy that we use for recurrent cases.
