Business professor at Cal Berkeley and best-selling author
Don Moore is perhaps the world’s preeminent scholar on overconfidence and decision making, and I look forward to trying to apply the lessons he taught today.
First, think probabilistically. Many of the decisions we make involve uncertainty, so rather than make categorical or binary assessments, we can think in terms of probabilities to improve our decision making. Jeff Bezos predicted that there was only a 30% chance that Amazon would succeed. But he also predicted that if it did succeed, the payoff would be enormous. Even though failure was the most likely outcome, it was probabilistic thinking that allowed Bezos to raise money and ultimately create Amazon. It was also probabilistic thinking that allowed Don and his then fiancé Sarah to send out more invites to their wedding than there were seats available.
Second, think probabilistically ahead of time. Not all choices we make in life will be successful. But we want to make sure we don’t beat ourselves up for good decisions that turn out unlucky. The six page memo used by Amazon employees helps them reward well-intended efforts, and protects employees from resulting…judging decisions only by the outcome rather than the process used.
And finally, keep track and keep score. By keeping track of our predictions, and then checking to see whether our predictions are accurate, we can begin to gauge whether we are accurately calibrated in our confidence judgments. Once I started doing this as a researcher, I realized that I was way too confident in my own predictions.
By following Don’s advice to think probabilistically and keep score of our predictions, we can all make better decisions. It’s a simple idea. Please take it seriously.
Don Moore Bio:
Don Moore is a Chaired Professor at Cal Berkeley where he teaches negotiation and decision making and researches overconfidence: specifically when people think they are better than they actually are, when people think they are better than others, and when they are too sure they know the truth.
As a researcher Don was co-lead on the Good Judgment Project, a forecasting tournament that predicted geopolitical events sponsored by the US government intelligence agency IARPA.
Don is also the author of several excellent books, including Decision Leadership, Perfectly Confident, and Judgement in Managerial Decision Making. He has published articles in numerous outlets, including the LA Times, the San Francisco Chronicle, Psychology Today, Harvard Business Review, Forbes, Fortune, USA Today, Business Week, and the Wall Street Journal.
I hope you enjoyed learning from Don Moore, because I always do.
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