The Illusion of Validity

Stories of how businesses rise and fall strike a chord with readers. But they ignore the determinative power of luck and inevitability of regression. This is an outcome bias, part hindsight and part halo effect. System 1 is designed to jump to conclusions from little evidence. Because of what you see is all there is, only the evidence at hand counts. The amount of evidence and its quality do not count for much because poor evidence can make a very good story. For some of our most important beliefs, we have no evidence at all, except that people we love and trust hold these beliefs. Considering how little we know, the confidence we have in our beliefs is preposterous, and