Think Twice: Harnessing the Power of Counterintuition

Repeated, good outcomes provide us with confirming evidence that our strategy is good and everything is fine. This illusion lulls us into an unwarranted sense of confidence and sets us up for a (usually negative) surprise.

These contrasting points of view reveal our first mistake, a tendency to favor the inside view over the outside view.6 An inside view considers a problem by focusing on the specific task and by using information that is close at hand, and makes predictions based on that narrow and unique set of inputs.

Warren Buffett said: “Virtually all surprises are unpleasant.”9 So considering the worst-case scenarios is vital and generally overlooked in prosperous times.

The second is the illusion of optimism. Most people see their future as brighter than that of others.

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

He defines a black swan as an outlier event that has a consequential impact and that humans seek to explain after the fact.

effect. Simulation is a tool that can help our learning process. Simulations are low cost, provide feedback, and have proved their value in other domains like military planning and pilot training.23

Evaluate the mix of skill and luck in the system that you are analyzing.

Popper argued that seeing lots of white swans doesn’t prove the theory that all swans are white, but seeing one black swan does disprove it. So Popper’s point is that to understand a phenomenon, we’re better off focusing on falsification than on verification. But we’re not naturally inclined to falsify something.