Overconfidence among physicians and nurses: The ‘micro-certainty, macro-uncertainty’ phenomenon

Baumann, Andrea; Deber, Raisa; Thompson, Gail G.

doi:10.1016/0277-9536(91)90057-j

Cited by 146 publications

(107 citation statements)

References 28 publications

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“…In contrast to previous studies that mainly rely on student subjects, most of our respondents are the 1 Surveyed subjects typically provide confidence bounds for their predictions that are too narrow (Alpert and Raiffa 1982). Researchers also document that experts in a variety of professional fields overestimate the precision of their information, e.g., clinical psychologists (Oskamp 1965), and physicians and nurses (Christensen-Szalanski andBushyhead 1981, Baumann, Deber, andThompson 1991). 2 Studies have shown that professionals such as engineers (Kidd 1970) and entrepreneurs (Cooper, Woo, and Dunkelberg 1988) are miscalibrated with regard to estimating the probabilities of random outcomes.…”

Section: Introductionmentioning

confidence: 80%

Managerial Miscalibration

Ben‐David¹,

Graham²,

Harvey³

2010

137

120

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Using a unique 10-year panel that includes more than 13,300 expected stock market return probability distributions, we find that executives are severely miscalibrated, producing distributions that are too narrow: realized market returns are within the executives' 80% confidence intervals only 36% of the time. We show that executives reduce the lower bound of the forecast confidence interval during times of high market uncertainty; however, ex post miscalibration is worst during periods of high uncertainty. We also find that executives who are miscalibrated about the stock market show similar miscalibration regarding their own firms' prospects. Finally, firms with miscalibrated executives seem to follow more aggressive corporate policies: investing more and using more debt financing.

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Section: Introductionmentioning

confidence: 80%

Managerial Miscalibration

Ben‐David¹,

Graham²,

Harvey³

2010

137

120

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“…As Baumann, Deber, andThompson (1991) demonstrated (andBerner andGraber [2008] reiterate), practitioner understanding can be biased by overconfidence. In the Baumann, Deber, and Thompson study, practitioners confronted with similar cases recommended incompatible treatments with high degrees of confidence.…”

Section: Practitioner Judgment and Patient Autonomymentioning

confidence: 99%

Applying Heuristics and Biases More Broadly and Cautiously

Schwab

2016

The American Journal of Bioethics

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“…While this example may be extreme it is not unusual. Overconfidence has been implicated in a wide range of decision errors, from going to war (Johnson 2004) to treatment of medical conditions (Baumann, Deber, and Thompson 1991;Oskamp 1965) to corporate investments (Malmendier and Tate 2005) to market entry (Camerer and Lovallo 1999;Mahajan 1992).…”

Section: Acknowlodgementsmentioning

confidence: 99%

Known Unknowns in Judgment and Choice

Walters¹

2014

PsycEXTRA Dataset

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This dissertation investigates how people make inferences about missing information.Whereas most prior literature focuses on how people process known information, I show that the extent to which people make inferences about missing information impacts judgments and choices. Specifically, I investigate how (1) awareness of known unknowns affects overconfidence in judgment in Chapter 1, (2) beliefs about the knowability of unknowns impacts investment strategies in Chapter 2, and (3) inferences about forgotten unknowns influence choices from memory in Chapter 3.Chapter 1 investigates how overconfidence can stem from neglecting to consider missing information. Most prior research has attributed overconfidence to people focusing disproportionately on evidence favoring the chosen hypothesis relative to its alternatives. In this iii chapter, I find that neglecting unknown evidence independently contributes to overconfidence. In a first study, respondents answered questions such as, "Which of these fast food items has more calories, a Subway sandwich, or a McDonald's cheeseburger? / How confident are you?" Using a process tracing technique, I found that participants who considered more missing evidence were less overconfident than those that thought about more known evidence. Meanwhile, participants who considered more unknown information answered the same number of questions correctly, resulting in better calibration. In two additional studies, I prompted participants to list unknowns before assessing confidence in their judgments. This "consider the unknowns" technique reduced overconfidence substantially, and was more effective than the de-biasing technique most often prescribed in the research literature ("consider the alternative"). Importantly, considering the unknowns was selective in its impact: it reduced confidence only in domains where participants were overconfident, but did not affect confidence in domains where participants were wellcalibrated or under-confident.Chapter 2 investigates how inferences about the knowability of missing information impacts investment choices. Recent research has found that people intuitively distinguish aleatory uncertainty that is inherently random or stochastic (e.g. What is the probability that a fair coin will land heads?) from epistemic uncertainty that is attributed to missing knowledge or information (e.g., Which company had a larger market capitalization at the end of 2015, Google or Apple?). In a series of surveys and experiments involving laypeople, experienced investors, and financial advisors, I found that investors who viewed stock market uncertainty as more epistemic/knowable searched for more stock information and were willing to pay more for financial advice, whereas investors who viewed stock market uncertainty as more aleatory/random diversify more. Similarly, when investors were primed to think about epistemic iv uncertainty they are more willing to pay for stock information whereas when they were primed to think about aleatory uncertainty they diversified mo...

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Overconfidence among physicians and nurses: The ‘micro-certainty, macro-uncertainty’ phenomenon

Cited by 146 publications

References 28 publications

Managerial Miscalibration

Managerial Miscalibration

Applying Heuristics and Biases More Broadly and Cautiously

Known Unknowns in Judgment and Choice

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