On ignoring scientific evidence: The bumpy road to enlightenment
AbstractIt is well accepted that people resist evidence that contradicts their beliefs. Moreover, despite their training, many scientists reject results that are inconsistent with their theories. This phenomenon is discussed in relation to the field of judgment and decision making by describing four case studies. These concern findings that “clinical” judgment is less predictive than actuarial models; simple methods have proven superior to more “theoretically correct” methods in times series forecasting; equal weighting of variables is often more accurate than using differential weights; and decisions can sometimes be improved by discarding relevant information. All findings relate to the apparently difficult-to-accept idea that simple models can predict complex phenomena better than complex ones. It is true that there is a scientific market place for ideas. However, like its economic counterpart, it is subject to inefficiencies (e.g., thinness, asymmetric information, and speculative bubbles). Unfortunately, the market is only “correct” in the long-run. The road to enlightenment is bumpy.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 973.
Date of creation: May 2006
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Web page: http://www.econ.upf.edu/
Decision making; judgment; forecasting ; linear models; heuristics;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- M10 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-21 (All new papers)
- NEP-CBE-2006-10-21 (Cognitive & Behavioural Economics)
- NEP-FOR-2006-10-21 (Forecasting)
- NEP-PKE-2006-10-21 (Post Keynesian Economics)
- NEP-SOG-2006-10-21 (Sociology of Economics)
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