Published: 2011 & Pages: 500
To understand situations and make decisions, our minds rely on cognitive coherence, constructing mental images to explain concepts. For instance, we have a mental image of summer as bright and hot. However, we tend to place excessive confidence in these mental images, even when data disagrees. For example, if the weather forecast predicts cool summer weather, we may still dress based on our mental image of a hot summer and end up shivering outside. To make better predictions, we can use reference class forecasting, which involves using specific historical examples to improve accuracy.
For instance, think of what you wore on a cold summer day in the past. Additionally, creating a long-term risk policy that plans for success and failure in forecasting can enhance decision-making. This approach allows us to rely on evidence rather than general mental images. For example, in terms of weather, it could involve bringing a sweater just in case. In this way, we can improve the accuracy of our decisions and avoid overreliance on often faulty mental images
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Our minds use cognitive coherence to construct mental images for understanding.
We use these images as references to base our assumptions and conclusions.
We can be overconfident in them, even when data disagrees, leading to mistakes.
It involves using specific historical examples to make more accurate forecasts by relying on evidence.
Think of past experiences and what you did in similar situations.
It helps plan for both success and failure in forecasting, leading to better decisions.
Dressing for a hot summer day despite a forecast for cooler weather.
Use evidence and historical examples to make more accurate forecasts.
Reference class forecasting is based on specific examples, while mental images are more general.
To make better predictions, use evidence and specific historical examples rather than general mental images.