Michael Mauboussin: When does intuition work or fail?
Daniel Kahneman: Intuition works less often than we think. There is no such thing as professional “expertise.” The Intuitions in chess masters develop with “big data” comes from experience. For people, the immediacy of feedback is especially important to learn the basis of expertise. When feedback comes closer in time to the decision, intuition tends to be a lot stronger. Gary Klein, author of The Sources of Power is hostile to Kahneman’s view. Together they studied the boundary between trustworthy and untrustworthy sources of intuition. Confidence of intuition is NOT a good guide of intuition. If you want to explore intuition, you have to ask “not how happy the individual is” but what domain they are working in. There are some domains where intuition works, and some domains where it does not. You need to ask “did the individual have an opportunity to learn irregularities on the way to building intuition? In domains where a lot of people have equal degrees of high confidence, they often do not know the limits of their expertise.
Mauboussin: People blend quantitative and qualitative intuition, but what about disciplined intuition? Is there a better structure to decision-making?
Kahneman: When you put human judgment against simple models, after reading Paul Meehl’s book which showed where the human has access to all of the data behind the model, the model still wins in making decisions. There are no confirmed counter-examples. Studied an interviewing system for combat units. Asked multiple interviewers to speak with each candidate with a focus on one topic only per subject. Previously the interviewers had experienced a looser system without restriction—one interviewer per subject, with a broad focus. Unfortunately the previous system had zero predictive value on subsequent performance. At first, when the interviewers were instructed on a “disciplined” focus/topical breakdown, they were furious. People like using their broad intuitions. The interviewers were given a rating scale of 1 to 5 in each area they were assigned to cover. Eventually we got the data on how performance turned out based on the revised interview process. It turned out that interviews done in this way had much better predictive value for subsequent performance.
The problem with intuitions is how they come too fast. They are subject to confirmation biases. If you look at just one thing independent of all else and reserve judgment until the very end, what ultimately comes to mind will be more valid than if you don’t have discipline. It’s important to stress the independence (focus on 1 topic) to resist and overcome associative coherence—aka the halo effect.
More here – Compounding My Interests
