Decision-Making Under Uncertainty
See how human judgment is systematically bounded, then walk the specific biases that distort estimates and choices so they can be recognized in the moment.
- Depth
- Practical
- Steps
- 7 existing graph entries
- 1
Judgment Is Bounded
Human judgment runs on limited information and fast, automatic heuristics, producing errors that are systematic and predictable rather than random. Robust systems and decisions are designed to account for bounded, biased judgment instead of assuming rational actors. Bounded Ra...
Start from the premise that human judgment is systematically bounded, not occasionally mistaken.
Related within this path
- References: System 1 and System 2
- 2
System 1 and System 2
Two modes of thinking. System 1 is fast, automatic, intuitive, and effortless; it runs constantly and generates impressions. System 2 is slow, deliberate, effortful, and capable of reasoning, but lazy and easily depleted. Most judgments originate in System 1, and System 2 usua...
Distinguish fast intuitive judgment from slow deliberate reasoning.
Related within this path
- References: Judgment Is Bounded
- 3
Anchoring
An initial value, even an arbitrary or irrelevant one, pulls subsequent estimates toward it. People adjust away from the anchor but insufficiently, so it contaminates the final judgment. Anchors shape estimates without awareness, which makes negotiation, pricing, and forecasti...
See how an initial number quietly pulls every later estimate toward it.
Related within this path
- Related To: Framing Effects
- 4
Availability Heuristic
Judging the frequency or probability of something by how easily examples come to mind. Vivid, recent, or emotionally charged instances feel more common than they actually are. Ease of recall is driven by salience and exposure, not by real frequency, so availability systematica...
Notice how ease of recall gets mistaken for actual frequency or risk.
- 5
Framing Effects
The same information or choice produces different decisions depending on how it is described. Logically equivalent framings, gains versus losses or survival versus mortality, are not psychologically equivalent. Because System 1 reacts to the description rather than the underly...
Watch how the presentation of equivalent options changes the choice.
Related within this path
- Related To: Anchoring
- 6
Planning Fallacy
Plans and forecasts are systematically too optimistic, built on best case scenarios and the specifics of the current case while ignoring how similar efforts actually went. Estimates skew toward the inside view. The inside view, this plan and these tasks, ignores the base rate...
Apply this to estimation: why plans run systematically late.
Related within this path
- Related To: Overconfidence
- 7
Overconfidence
People are systematically more confident in their judgments and forecasts than accuracy warrants. Subjective certainty reflects the coherence of the story they have constructed, not the evidence or their actual track record. Overconfidence drives bad forecasts, unheeded risk,...
Close on the bias that amplifies the others: misplaced confidence in our own judgment.
Related within this path
- Related To: Planning Fallacy