How much information do you actually need to make that decision?
– Paul Slovic famously took horserace handicappers and fed them various amounts of information to see what the optimal amount of data was. The key takeaway was that the average accuracy of predictions was the same no matter how much info they had, but their CONFIDENCE in their decisions went up right alongside the quantity of information.
– Said another way, sometimes smart people will think just because they have more data that they can make a better decision. Slovic showed this isn’t necessarily the case.
– We need to develop internal thresholds for not only what matters, but how much of it we should have before we make a decision. Calibration matters.
– As the quote goes (probably attributable to Einstein), “everything should be made as simple as possible, but not simpler.” Keep it in mind (especially when betting on the ponies).