The distortion of beliefs in the face of uncertainty

This paper is about uncertainty and rationality in everyday life and business. A central concept is that of randomness. Probability is used to model randomness. However, social and behavioral phenomena are rarely if ever conceived as strictly random. It can be debated how useful probability is when applied in this field of work. Significance testing has led researchers astray. It is further pointed out that judgments and beliefs often are affected by underlying values and reflect strong tendencies toward wishful thinking. Cognitive limitations are also important. Research on expert judgment is reviewed showing how statistical models usually outperform even the best experts. In action, biased thinking may or may not be detrimental, and there is a very delicate balance to keep between the need to motivate oneself for forceful action, and to keep a realistic view of the possibilities of success. It is found in action sampling data described here that people encounter problems, calling for thought and the formation of constructs, only relatively rarely, but when they do they tend to be in an unpleasant emotional state. Uncertainty is one such state, in which one encounters difficult problems and expects little success. Further indications of biased information processing are found in correlated beliefs and values, and in “double denial”, i.e. twisted reasoning where beliefs and values are adjusted so as to fit a pre-conceived notion. Since these are very general and forceful tendencies in human thinking and reasoning, education is not likely to change them