Professor Don Moore speaks on confidence and over-confidence.
Don Moore: The Psychology Of Confidence Interval
Q4 hedge fund letters, conference, scoops etc
Transcript
It is an honor to be able to be with you this afternoon. So since I graduated from Kellogg I've been studying confidence and overconfidence in one form or other. Much has been written about confidence and what a leader ought to display in terms of confidence. Obviously if there is one of the defining principles with which I connect most strongly to his confidence without attitude and I occasionally hear the concern expressed by students that we might be failing to display our greatness. By moderating the enthusiasm with which we express confidence it's an issue that I was thinking about when my family and I went up to with the bear family camp and drove through confidence California. Some would contend that if you're going to play keno at the confidence in it being more confident would actually. Be in your interest. One of my favorite examples of claims about the benefits of confidence comes from the book and accompanying movie The Secret. I'd like to share a brief clip with you from the movie from believes there is. A universe. Where you have the belief that everything goes right for me.
Or you have to believe that I'm not getting older. Younger. We can create it the way we want it by using the law of attraction. You can break free. From. Military passions. Cultural codes. Social views and prove once and for all the power within you.
May be thinking well that's very nards. I can't do that. She will let me do that or. He'll never let me do that or.
I have to do that or I'm not strong to do that or I'm not rich enough to do that. Na na not every single. I'm not really. Any.
Limits to this. Absolutely. We are limited. We have no ceiling capabilities and the talents and the gifts and the power that is with it every single individual on this planet is.
A bold claim indeed which I would like to explore by way of a little game if you'll play along with me. It happens frequently in our personal lives and in our work lives that we have to estimate uncertain quantities and answer the question in some form. How confident am I. How sure am I. That I know what's going to happen that I have the right estimate. So by way of thinking about your confidence calibration helped me out and give me an estimate of the U.S. population. To do this I need to pull out a pen you have pens at your tables and a piece of paper. You have some guess. So don't pull out your phone and google this. This is about the knowledge that's in your head and how well calibrated you are about the accuracy of that knowledge. You have some guesses about what U.S. population is but you're not exactly sure. So what I'm looking for here is a 90 percent confidence interval. When engineers are forecasting the forces that are building is going to be subject to the old estimate a confidence interval. When the engineers are designing aircraft and trying Qantas to paint the forces that are like that are likely to be subject that it is likely to be subject to they will generate a confidence interval when we forecast how earthquakes are going to affect structures on campus. We generate confidence intervals because we're not exactly sure of the what the number is going to be and we need to have some sense of how it's like whoa what sort of reagents likely have variance. So 90 percent confidence interval means a range of numbers around your best estimate a lower bound below it and an upper bound to it. From your perspective a lower bound and an upper bound that range being wide enough that you're 90 percent sure of the right answer is inside it. Okay so for us population.
You've written down a range.
