In the experiment, some participants saw arguments for only one side of a legal dispute while other participants (called ‘jurors’) saw arguments for both sides. Participants predicted the number of jurors who favored the plaintiff in each case.
Participants who saw only one side made predictions that were biased in favor of that side. Furthermore, they were more biased and confident but generally less accurate than participants who saw both sides.
The results indicate that people do not compensate sufficiently for missing information even when it is painfully obvious that the information available to them is incomplete and other side is present. Also there is no reason to believe that arguments presented by one side are more credible than those presented by other side.
Good news is that researchers found that simply prompting participants to consider other side of the story greatly reduced their bias and tendency to under-weigh missing evidence.
Participants who saw only one side made predictions that were biased in favor of that side. Furthermore, they were more biased and confident but generally less accurate than participants who saw both sides.
The results indicate that people do not compensate sufficiently for missing information even when it is painfully obvious that the information available to them is incomplete and other side is present. Also there is no reason to believe that arguments presented by one side are more credible than those presented by other side.
Good news is that researchers found that simply prompting participants to consider other side of the story greatly reduced their bias and tendency to under-weigh missing evidence.
I think this applies to trading quite well. Often we become so engrossed in our analysis and point of view that we forget to see from other side. For example, if we are bullish about a particular chart or market, it easy to not see or under-weigh the information from bearish side. It helps to seek out or at the least consider the available information from opponent point of view.
Good decisions come from experience. Experience comes from making bad decisions." - Mark Twain
0 comments:
Post a Comment