Noise by Kahneman, Sibony, and Sunstein

Last night I had the pleasure of listening to William Tipper, Associate Editor of Books for The Wall Street Journal interview Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein regarding their new book, NOISE. These authors’ credentials in terms of critical thinking, strategic planning, and decision-making are impressive: Kahneman (a Nobel Prize winner) also wrote Thinking Fast and Slow, while Sunstein co-authored Nudge and all three are professors at well-regarded institutions (Princeton, HEC Paris and Oxford, and Harvard). They subtitled their book “A Flaw in Human Judgment” and focus on how “noise” (random scatter or variability) along with bias (systematic deviation) each contribute error as humans make decisions. Citing numerous examples from diverse fields like the justice system (think about juries or sentencing), medicine (diagnoses, etc.), and the business world (hiring decisions, underwriting, and investment choices, for example), they explain the problem, including our resistance to believing how vulnerable we are to noise. They also devote considerable attention to suggestions for institutional design or “decision hygiene” such as aggregating independent views and consulting experts (“wisdom of crowds”); establishing guidelines (as is done for judges); adopting processes to structure decisions by breaking them down and keeping components separate; and delaying intuition and snap decisions. The book’s appendix provides instructions on how to conduct a noise audit, a checklist for a decision observer, and information on correcting predictions. Extensive notes are also supplied. Given the disruption of the last year or so, this seems an especially valuable text worth consulting.