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Thinking and Deciding 6: Descriptive Theory of Probability Judgment

09/06/2013

Human beings are really not that good at making accurate probability judgments, because we focus on information that we should ignore, and ignore the info we should focus on.

Accuracy of probability judgments

We overestimate low probabilities, and underestimate high probabilities. There’s also overconfidence when confidence is high, and underconfidence when it is low.

Heuristics and biases in probability

Baron provides a nice overview of all the different ways that people violate the normative aspect of probability theory.  There’s representativeness and availability heuristics, hindsight bias, among others.

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