THE BIZOP NEWS

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The NPR has a useful introduction to behavorial economics, and I want to focus on Kahneman and "the pure visceral power of his own certainty. He eventually coined a phrase for it: "illusion of validity."

BACKGROUND- FIND THE RIGHT STUFF

Kahneman's primary job was to try to figure out which of his fellow soldiers might make good officers.

To do this, Kahneman ran the men through an unusual exercise: He organized them into groups of eight, took away all their insignia so know one knew who had a higher rank, and told them to lift an enormous telephone pole over a 6-foot wall.

Kahneman felt the exercise was incredibly revealing.

"We could see who was a leader, who was taking charge," Kahneman says. "We could see who was a quitter, who gave up. And we thought that what we saw before us is how they would behave in combat."

THE RECOMMENDATIONS

Certain of their wisdom, Kahneman and his fellow psychologists would make recommendations after the exercise.

The chosen men would go to officer school, and Kahneman would move on to the next batch of soldiers.

THE CATCH

There was only one problem: Kahneman and his colleagues were terrible at it.

Every month or so, Kahneman would get feedback from the school about his picks, and "there was absolutely no relationship between what we saw and what people saw who examined them for six months in officer training school," he says.

THE CONCLUSION

But here's the remarkable thing: Despite the negative feedback, Kahneman's faith in his own ability was unshaken.

Kahneman was surprised by the pure visceral power of his own certainty. He eventually coined a phrase for it: "illusion of validity."

The power and illusion of validity.  Where does this power come from?  How can it trump evidence?  Why when evidence is provided does the illusion of validity remain untouched?