In Chapters 20 to 22 of Thinking, Fast and Slow I learned that people have an illusion of validity. They think they have excellent judgment even given evidence to the contrary. Despite no correlation on year to year performance a brokerage house will still reward top performers each year.
In fact formulas often predict better than people once key factors are identified. People are likely to override the decision based on an illusion of validity or based on WYSIATI.
The fields where experts can predict well depend on how regular the environment is or how quickly feedback comes. Chess masters and anesthesiologists can make excellent, quick predictions. Stock brokers and experts in Middle Eastern politics often do worse than chance.
I’ll probably write up Chapters 23 and 24 later today to finish part III of the book. Then I’ll start summarizing by parts and not chapters. Now that Kahneman has presented his key ideas each chapter seems to focus on a specific, easily summarized topic.
Excuse typos today. I wrote this on my phone.