I understand and accept the premise that biases can be adaptive, and therefore beneficial to success and not evil.
You bring up the idea of normative frameworks, which I like, but don’t expound upon the idea. Which biases, in which frameworks, lead to success? Is this something we can speculate about?
For example, what biases and what framework would be successful for a stock market trader?
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 get the “normative” jargon from Baron’s Thinking and Deciding. In studies of decision making you can roughly break the work down into three categories; descriptive, normative and prescriptive.
The first consists of studying how people actually think; that’s typically the work of the Kahneman and Tverskys of the field.
The second consists of identifying what rules must hold if decisions are to satisfy some desirable properties; for instance Expected Utility is normative in evaluating known alternatives, Probability Theory is normative in assessing probabilities (and even turns out to be normative in comparing scientific hypotheses).
The third is about what we can do to bring our thinking in line with some normative framework. “You should compute the Expected Utility of all your options and pick the highest valued one” may not be an appropriate prescription, for instance if you are in a situation where you have many options but too little time to consciously work out utilities; or in a situation where you have too few options and should instead work on figuring out additional options.
This might be worth writing up as a top-level post for future reference and further discussion.
I understand and accept the premise that biases can be adaptive, and therefore beneficial to success and not evil.
You bring up the idea of normative frameworks, which I like, but don’t expound upon the idea. Which biases, in which frameworks, lead to success? Is this something we can speculate about?
For example, what biases and what framework would be successful for a stock market trader?
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.”
I get the “normative” jargon from Baron’s Thinking and Deciding. In studies of decision making you can roughly break the work down into three categories; descriptive, normative and prescriptive.
The first consists of studying how people actually think; that’s typically the work of the Kahneman and Tverskys of the field.
The second consists of identifying what rules must hold if decisions are to satisfy some desirable properties; for instance Expected Utility is normative in evaluating known alternatives, Probability Theory is normative in assessing probabilities (and even turns out to be normative in comparing scientific hypotheses).
The third is about what we can do to bring our thinking in line with some normative framework. “You should compute the Expected Utility of all your options and pick the highest valued one” may not be an appropriate prescription, for instance if you are in a situation where you have many options but too little time to consciously work out utilities; or in a situation where you have too few options and should instead work on figuring out additional options.
This might be worth writing up as a top-level post for future reference and further discussion.