Noise

NOISE: A Flaw in Human Judgment

by Daniel Kahneman, Olivier Sibony, & Cass R. Sunstein

Human judgments (from forecasts to performance evaluations and forensic analyses) are inconsistent and inaccurate. Given the same context and information, different people will make different judgments or decisions. This book explores the concept of noise, the random variability in judgment that leads people to evaluate the same information differently.

In this summary, you’ll learn:

• What system noise is and how it affects all types of decisions, from personal to professional judgments, individual to group decisions, and private sector to public sector.
• The difference between noise and bias, the components of system noise, how to evaluate the quality of judgments, and how to measure noise.
• A range of strategies for reducing noise, including how to do noise audits, find good judges, use debiasing, and adopt preventive decision hygiene strategies.
• Problems and limits to noise reduction, and how to consider the “right” level of noise to accept.

Who should read this:

• Executives, managers, and professionals who make or oversee high-stakes judgments in areas like hiring, pricing, forecasting, or performance evaluation.
• Anyone interested in behavioral economics, cognitive psychology, and how hidden errors shape our decisions.