Why We All Make Mistakes and How to Avoid Them
Fleeting- External reference:
- External reference: https://www.spreaker.com/user/human-risk/olivier-sibony-on-making-mistakes
on the human risk podcast, with Olivier Sibony
The question that Olivier Sibony wanted to tackle was: Why do we tend to make the same mistakes, when it does not follow our incentives and people around us can tell us it is a mistake?
We tend to explain errors of people making decision with internal characteristics, like hubris or stupidity (see fundamental attribution error). A more parsimonious hypothesis would be do assume that those people, like you and me, make systematic mistakes (cognitive bias) and look for answers into our decision making strategies. In other terms, in 100 people make similar mistakes, then it is simpler to assume one cause rather than 100 individual causes.
Concluding that it is the fault of a few bad apples is a red herring, because it prevents us from improving ourselves. The hard part here is that the last thing the fish sees is the water around it and we tend to be blind to our own biases and see only the biases of others.
Actually, this is what the work of Olivier Sibony seems to be about. Making the decision makers include other people that are more likely to spot their “obvious” errors in the decision making process.
In case the outcome of a decision is bad, people should not put the decision into question, because they could not have known it (retrospective bias). We should evaluate the decision and the rewards at the time the decision is made, not at the time the outcome is known.
The main issue in enterprises is that they delude themselves into believing every thing is under control (illusion of control). What you want to hear is “everything is under control, there is no risk”. When presented with a strategy, there is generally a page about the known risks and about the mitigation parts, as if we had shed some light on the unknown. People should rather embrace the unknown unknowns and the probability they will happen instead of being blind to them. Like in finance or in poker playing, you don’t know what will happen, but you can still assess them in the decision taking, instead of believing that everything will go alright because you have “mitigated the risks”. instead, most people act as if risk should be eliminated rather than acknowledged.