Your Broker Is Probably a Master of Illusion

U.S. News & World Report:

Daniel Kahneman is an Israeli-born psychologist. He won the Nobel Prize in economic sciences in 2002. He is best known for his work in behavioral economics, which attempts to explain how investors make decisions.

In a thoughtful article adapted from his upcoming book, Thinking, Fast and Slow, Kahneman makes some interesting observations. He notes that his ability, and those of his colleagues, to identify potential leaders in the Israeli military was “better than blind guesses, but not by much.” This is surprising, since he had all the tools necessary to do an intelligent observation of military candidates as they performed their assignments in various training exercises.

Despite overwhelming evidence that he couldn’t make these predictions with any accuracy, the process continued without change. He would follow the same procedure, make predictions of little value, and act as if he was doing something useful.

Read the whole story: U.S. News & World Report