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Irrationality 20, 21: The Failure of Intuition, Utility

01/23/2013

Chapter 20: The Failure of Intuition

The scope of this chapter was pretty narrow. It tried to argue for the general poor judgment that intuition provides, but it only focused on a few areas, like medical decisions and interviewing. Intuition isn’t always unreliable in all contexts, so only focusing on the failures of intuition may lead some to irrationally reject it when it could be useful.

Kindle Notes:

This chapter will demonstrate that human intuition is in fact remarkably bad: indeed it is so poor that when the same data used by people in making intuitive judgements are submitted to a formal mathematical analysis, the resulting judgements are consistently much better than those of people (3826).

It has repeatedly been shown that in personnel selection interviewing is not merely unhelpful, it can be harmful. Neal Schmitt begins an article on interviewing by stating that four separate reviews each of dozens of studies ‘have concluded that the interview as employed in many employment situations lacks both reliability and validity’, that is to say, the judgements of different interviewers do not agree with one another and they bear no relationship to the suitability of applicants for a job (4016).

moral
1. Suspect anyone who claims to have good intuition.
2. If you are in a profession, don’t hesitate to take decisions by using a mathematical model if it has been shown to be better than human judgement.
3. If you are an applicant, instead of being indignant at not being interviewed, reflect that the organisation is almost certainly ahead of its time (4066).

Chapter 21: Utility Kindle Notes

One of the most dangerous occupations is deep-sea fishing: although the chance of being killed on the job is one in 1,000 per year (or about 4 per cent in a lifetime), the pay ensures that there is no shortage of recruits. Since, then, we constantly put implicit values on human life, it is irrational to argue that it does not have a monetary value even if most people are too squeamish to admit it (4624).

moral
1. When the importance of a decision merits the expenditure of time, use Utility Theory or a watered-down version of it.
2. Before taking an important decision decide what your overall aim is, whether it be to maximize the attainment of your goals, to save yourself from loss, to make at least some improvement in your position and so on.
3. Don’t value everything in terms of money unless you’re an accountant (4342).

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