Think Twice: Harnessing the Power of Counterintuition

Examples include economic and political forecasts. The evidence shows that collectives outperform experts in solving these problems. For instance, economists are extremely poor forecasters of interest rates, often failing to accurately guess the direction of rate moves, much less their correct level.

While a reduction in diversity does not guarantee a system change (although it does invoke invisible vulnerability), it substantially raises the probability.

Consider the situation first and the individual second. This concept, called attributional charity, insists that you evaluate the decisions of others by starting with the situation and then turning to the individuals, not the other way around.

Study the distribution of outcomes for the system you are dealing with.

person holds two cognitions—ideas, attitudes, beliefs, opinions—that are psychologically inconsistent.”15 The dissonance causes mental discomfort that our minds seek to reduce.

Just as watching one bee won’t help you understand the hive’s behavior, listening to individual investors will give you scant insight into the market.10

The key is to properly prepare for whatever the system metes out, extreme or not. For the most part, people are scorched not by black swans, the unknown unknowns, but rather by their failure to prepare for gray swans.

“fundamental attribution error” to describe the tendency to explain behavior based on an individual’s disposition versus the situation.

This idea introduces our third decision mistake, inappropriately relying on intuition. Intuition can play a clear and positive role in decision making. The goal is to recognize when your intuition will serve you well versus when it will lead you astray.