How to Avoid Anchoring in Strategic Decision Making?

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Recently, Taleb and Nobel prize-winning psychologist Daniel Kahneman together explored their differing approaches to unlocking the mysteries of decision making processes (in the New York Library). Taleb learned from Kahneman the idea of : when you ask someone the last four figures of his social security number and then how many dentists exist in Manhattan, there will be a correlation according to Kahneman. People use available 'knowledge', information and forecasts (KIF) without any doubt. And the more complex the KIF presented, the riskier decisions people make! People are too 'gullible' (Editor: ~naive, unsuspecting) using KIF. Besides this naivety, sometimes it can also be very profitable for them to use complex KIF (think of bonuses and rewards). So people, according to psychology, will overly use (early) presented KIF in their decisions. And that can be disastrous: such decisions, based on anchoring and forecasting, can have severe side effects (Taleb calls them 'iatrogenics (...) Read more? Sign up for free

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