8 - Cognitive Biases in Prediction

Summary

Predictions often falter because of human error. Most misses have much more to do with our own human shortcomings than with the technical sophistication of the method at hand. In our experience, forecasting errors occur when we discard or misinterpret evidence right in front of us. The clues are there, but we are blinded by our own filters. This is why it is essential to tackle such biases and discuss corresponding solutions. In this chapter, we’ll look at studies on the forecasting prowess of experts. Then, we’ll focus on cognitive biases that skew predictions. Finally, we’ll present an applied approach to minimize such biases.