55sec snip

The Knowledge Project with Shane Parrish cover image

#28 Michael Mauboussin: A Decision Making Jedi

The Knowledge Project with Shane Parrish

NOTE

Valuing Own Skill Over Base Rate

Knowledge workers tend to overvalue their own skill and discount the base rate when assessing a situation. One statistical method to address this is based on a formulation in statistics that compares the standard deviations of independent distributions using a formula resembling the Pythagorean theorem. This method helps in acknowledging the importance of the base rate in decision-making.

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