Capital Allocators – Inside the Institutional Investment Industry

[REPLAY] Gary Klein with Paul Sonkin and Paul Johnson – Conducting Pre-Mortem Analysis (Capital Allocators, EP.109)

Sep 14, 2020
Gary Klein, a pioneering cognitive psychologist, shares his expertise in naturalistic decision-making and the Pre-Mortem method. Joined by finance professors Paul Johnson and Paul Sonkin, they discuss how anticipating failures can enhance investment strategies. The trio delves into the efficacy of Pre-Mortem analysis, its origins in the Air Force, and its practical applications. They explore cognitive tools like ShadowBox and highlight the importance of psychological safety in team decision-making, emphasizing the value of diverse perspectives in risk assessment.
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ANECDOTE

Pilots vs. Checklists

  • Gary Klein's Air Force experience highlighted pilots' reliance on intuition over checklists.
  • Pilots admitted to not following procedures, preferring their own tacit knowledge.
INSIGHT

Expertise and Tacit Knowledge

  • Expertise isn't about memorizing rules, but developing tacit knowledge.
  • Checklists help, but real-world situations demand adaptability beyond procedures.
ADVICE

Effective Simulation

  • Simulator effectiveness lies in good training scenarios, not realism.
  • Focus on challenging scenarios to develop expertise.
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