I think Kutta is right to suggest that we use the term bias for “a pattern of errors”. What is confusing is that we also tend to refer by that term to the underlying process which produces the pattern, and that such a process is beneficial or detrimental depending on what we use it for.
If it is indeed the case that the confirmation bias shown in cognitive studies is produced by the same processes that our perception uses, then confirmation bias could be a good thing for a stock trader, if it lets them identify patterns in market data which are actually there.
The audio sample above would be a good analogy. First you look at the market data and see just a jumble of numbers, up and down, up and down. Then you go, “Hey, doesn’t this look like what I’ve already seen in insider trading cases ?” (Or whatever would make a plausible example—I don’t know much about stock trading.) And now the market data seems to make a lot of sense.
In this hypothesis (and keep it mind it is only a hypothesis) confirmation bias helps you make sense of the data. Being aware of confirmation bias as a source of error reminds you to double-check your initial idea, using more reliable tools (say, mathematical) if you have them.
I think Kutta is right to suggest that we use the term bias for “a pattern of errors”. What is confusing is that we also tend to refer by that term to the underlying process which produces the pattern, and that such a process is beneficial or detrimental depending on what we use it for.
The “Heuristics and Biases” party line is to use “heuristic” to refer to the underlying mechanism. For example, “the representativeness heuristic can lead to neglect of base-rate.”
I think Kutta is right to suggest that we use the term bias for “a pattern of errors”. What is confusing is that we also tend to refer by that term to the underlying process which produces the pattern, and that such a process is beneficial or detrimental depending on what we use it for.
If it is indeed the case that the confirmation bias shown in cognitive studies is produced by the same processes that our perception uses, then confirmation bias could be a good thing for a stock trader, if it lets them identify patterns in market data which are actually there.
The audio sample above would be a good analogy. First you look at the market data and see just a jumble of numbers, up and down, up and down. Then you go, “Hey, doesn’t this look like what I’ve already seen in insider trading cases ?” (Or whatever would make a plausible example—I don’t know much about stock trading.) And now the market data seems to make a lot of sense.
In this hypothesis (and keep it mind it is only a hypothesis) confirmation bias helps you make sense of the data. Being aware of confirmation bias as a source of error reminds you to double-check your initial idea, using more reliable tools (say, mathematical) if you have them.
The “Heuristics and Biases” party line is to use “heuristic” to refer to the underlying mechanism. For example, “the representativeness heuristic can lead to neglect of base-rate.”