Archive for August, 2007

The Hindsight Bias

Overcoming Bias has a good overview of the hindsight bias (which also figures prominently in Nassim Taleb’s The Black Swan) and how it has a (usually negative) effect on everyday life:

Viewing history through the lens of hindsight, we vastly underestimate the cost of effective safety precautions. In 1986, the Challenger exploded for reasons traced to an O-ring losing flexibility at low temperature. There were warning signs of a problem with the O-rings. But preventing the Challenger disaster would have required, not attending to the problem with the O-rings, but attending to every warning sign which seemed as severe as the O-ring problem, without benefit of hindsight. It could have been done, but it would have required a general policy much more expensive than just fixing the O-Rings.

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NNT discussing The Black Swan on the Charlie Rose show (via Paul Kedrosky).

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The New York Times wrote an article describing the travails of various Silicon Valley workers who are “single digit millionaires” who continue to work. My personal experience has been that people who continue to work when they don’t need to do it because they enjoy the work however the article highlighted people who don’t think they are wealthy enough. A lot of this is a simple “keeping up with the jones'” problem – people are wealthy enough, just not as much as their neighbors. At any rate, this highlights a missing aspect in the Times piece – did they go and find people who made enough money in Silicon Valley and decided to move some place else and / or not work? Arguably this isn’t the focus of the piece but it’s certainly not representative of all (and quite likely most) workers in Silicon Valley.

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