Noise

by Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein

The shooting range is a metaphor for what can go wrong in human judgment, especially in the diverse decisions that people make on behalf of organizations. In these situations, we will find the two types of error illustrated in figure 1. Some judgments are biased; they are systematically off target. Other judgments are noisy, as people who are expected to agree end up at very different points around the target. Many organizations, unfortunately, are afflicted by both bias and noise.

A general property of noise is that you can recognize and measure it while knowing nothing about the target or bias.

The general property of noise just mentioned is essential for our purposes in this book, because many of our conclusions are drawn from judgments whose true answer is unknown or even unknowable.

We don’t need to know who is right to measure how much the judgments of the same case vary.

Wherever you look at human judgments, you are likely to find noise. To improve the quality of our judgments, we need to overcome noise as well as bias.