Base Rates
Daniel Kahneman · 2011
"Anchor to what usually happens before adjusting for what makes this case special."
When forecasting, most people describe what makes their situation unique and forget the base rate — how often the outcome occurs across all similar situations. Most startups fail. Most books don't sell. Most projects run over budget. That prior should be the starting point.
The failure mode is called the inside view: focusing on details of the specific case ('our team is exceptional') at the expense of the outside view ('90% of ventures like this fail'). Kahneman's advice: start with the base rate, then adjust modestly for what's genuinely different. The inside view is not wrong, but it's rarely as different as it feels.
A founder says 'our startup will succeed because our team is unusually talented.' What is the base-rates critique?
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The explanation above is written with AI assistance. These are the originals — go to them to check it.
- Base rates & the base rate fallacy (Kahneman)Wikipedia
The Cynefin Framework
"You cannot manage a complex system the same way you manage a complicated one. You must adapt your decision-making to the domain you are in."