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Is human probability judgment really so poor? 269
assessment will produce the more veridical answer. Gigerenzer argues
that the untrained mind has a frequentist design. Just as it would be
unrealistic to expect one’s pocket calculator to accurately compute the
answer to arithmetic problems entered with Roman numerals, it may
be unreasonable to judge the general competence of human judgment
on the performance of problems requiring the assessment of subjective
probabilities rather than frequencies. Put simply, Gigerenzer argues that
we are not equipped to reason about uncertainty using single-event
probabilities but we can reason successfully about uncertainty with
frequencies. In another demonstration of the single-event/frequency
dichotomy, Sniezek and Buckley 41 gave subjects a series of general
knowledge questions with two alternative answers, one of which was
correct. The subjects had to select the answer which they thought was
correct and then estimate the probability that their selection was the correct
one. Her results showed the same general overconfidence which has
been reported in other studies. However, when she asked respondents
simply to state the number of times they had picked the right answer for
the total number of two alternative questions that they had responded
to, then individuals’ frequency estimates were well calibrated. This was
despite the fact that the same individuals were, generally, overconfident
in their subjective probability assessments for individual questions.
Overall, Gigerenzer argues that the way in which we process information
isn’t suited to making subjective probability assessments. Indeed,
Kahneman and Lovallo 42 have argued that we have a strong tendency
to see forecasting problems as unique when they would best be thought
of as instances of a broader class of events. They claim that the natural
tendency in thinking about a particular problem, such as the likelihood
of success of a new business venture, is to take an ‘inside’ rather than
the ‘outside’ view. People tend to pay particular attention to the distinguishing
features of the problem in hand and reject analogies to other
instances of the same general type as superficial.
They cite a study by Cooper, Woo and Dunkelberger 43 which showed
that entrepreneurs who were interviewed about their chances of business
success produced assessments that were unrelated to objective
predictors such as college education, prior supervisory experience and
initial capital. Moreover, more than 80% of them described their chances
of success as 70% or better while the overall survival rate for new businesses
is as low as 33%. In such a case, Gigerenzer’s advice would be
to ask the individual entrepreneurs to estimate the proportion of new