Illusion of validity

Illusion of validity is a cognitive bias in which a person overestimates his or her ability to interpret and predict accurately the outcome when analyzing a set of data, in particular when the data analyzed show a very consistent pattern—that is, when the data "tell" a coherent story.[1][2]

This effect persists even when the person is aware of all the factors that limit the accuracy of his or her predictions, that is when the data and/or methods used to judge them lead to highly fallible predictions.[2]

In one study, for example, subjects reported higher confidence in a prediction of the final grade point average of a student after seeing a first-year record of consistent B's than a first-year record of an even number of A's and C's.[2] Consistent patterns may be observed when input variables are highly redundant or correlated, which may increase subjective confidence. However, a number of highly correlated inputs should not increase confidence much more than only one of the inputs; instead higher confidence should be merited when a number of highly independent inputs show a consistent pattern.[2]

This bias was first described by Amos Tversky and Daniel Kahneman in their 1973 paper "On the Psychology of Prediction".[3]

Examples

Kahneman describes this bias as the first cognitive bias he became aware of. At 21 years old, while serving in the Israeli army as a psychologist, he was a part of a team that conducted a test, the Leaderless Group Test, to select candidates for officer training. Eight participants were stripped of all identifying marks of rank and insignia, and set about navigating an obstacle course while meeting certain conditions. Kahneman and his peers observed the test and, after forming coherent and clear impressions of the soldiers and writing down formal predictions based on their judgment, submitted notes to their superiors. While the observers consistently failed in predicting a candidate's performance in officer training school, the team incongruously remained optimistic in their ability to correctly predict future outcomes.[4]

Other cases where this phenomenon appears include job interviews, wine tasting, stock markets, political strategy.[5][4]

Causes

The illusion of validity may be caused in part by confirmation bias and/or the representativeness heuristic, and could in turn cause the overconfidence effect.[3]

See also

References

  1. ↑ Kahneman & Tversky 1973.
  2. 1 2 3 4 Tversky & Kahneman 1974.
  3. 1 2 Einhorn & Hogarth 1978.
  4. 1 2 Kahneman 2011.
  5. ↑ Kahneman 2007.

Bibliography

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