Thaler — “The difference between the expert’s two estimates illustrates…”

Source: Misbehaving: The Making of Behavioral Economics — Richard H. Thaler

Book page: thaler-misbehaving

From: Misbehaving: The Making of Behavioral Economics — Quotes

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The difference between the expert’s two estimates illustrates Danny’s distinction between the inside and outside views. When the expert was thinking about the problem as a member of project team, he was locked in the inside view—caught up in the optimism that comes with group endeavors—and did not bother thinking about what psychologists call “base rates,” that is, the average time for similar projects. When he put on his expert hat, thereby taking the outside view, he naturally thought of all the other projects he’d known and made a more accurate guess.