Situations / Forecasting
Forecasting
Predicting what will happen next.
Traps you might be in
- No. 0037 Anchoring BiasThe seller asks $18,000, and you spend the evening deciding how far below that number you can go.
- No. 0068 Availability HeuristicAfter watching a clip of a shark attack, you cancel a beach swim you were looking forward to.
- No. 0196 Conjunction FallacyIn the forecast meeting, a detailed story about a recession and a market crash feels likelier than a recession alone.
- No. 0413 Gambler’s FallacyAfter five heads in a row, you put more money on tails.
- No. 0466 Hindsight BiasThe layoffs are announced, and last month’s vague worry suddenly feels like something you knew for sure.
- No. 0476 Hot Hand FallacyAfter three winning roulette bets, you double your next stake because tonight you feel unstoppable.
- No. 0494 Impact BiasYou check an unanswered job application again, certain that getting the offer would make the whole year feel different.
- No. 0697 Optimism BiasYou read that most applicants get rejected, then start planning what to wear on your first day.
- No. 0705 Overconfidence EffectYou promise the client Friday, leave no buffer, and are surprised when one ordinary snag pushes delivery into next week.
- No. 0740 Planning FallacyYou promise the report by Friday, then spend the next week fixing problems your schedule never included.
- No. 0846 Representativeness HeuristicA stranger talks enthusiastically about chess, and you decide he’s a mathematician before learning what he does for a living.
- No. 1027 Texas Sharpshooter FallacyAfter trying twenty cuts of a sales dashboard, you find one winning customer group and call it the campaign’s intended audience.
Tools to try
- No. 0087 Bayesian UpdatingThe fraud alert looks damning, until you learn how often it flags perfectly ordinary purchases.
- No. 0125 CalibrationYou open your prediction log and find that only half the things you called 80% certain actually happened.
- No. 0199 Consider-the-Opposite StrategyBefore sending a furious reply, you jot down three reasons your coworker’s message might not be an insult.
- No. 0239 Decision JournalSix months after a disappointing hire, you open your original notes and discover how certain you were that it would work.
- No. 0381 Fermi EstimationThe launch meeting starts in ten minutes, and you still need a defensible guess at how many support agents to book.
- No. 0704 Outside View vs. Inside ViewYou budget six weeks for a renovation, then learn that the last five similar jobs on your street took four months.
Patterns at play
- No. 0180 Compounding EffectYour savings earn $500 the first year, then $525 the next, even though you haven’t added a dollar.
- No. 0468 Hofstadter’s LawYou add two extra weeks to a software launch, then spend both fixing a dependency nobody knew was there.
- No. 0574 Lindy EffectYou reach past this year’s bestseller for the book people are still recommending fifty years after it appeared.
- No. 1040 Tipping PointTwo people leave your weekly game night, and the remaining friends stop coming because they expect an empty table.
- No. 1090 Wisdom of CrowdsYour team’s guesses for next month’s sales range widely, but their average lands closer than anyone expected.
Concepts to know
- No. 0376 Fat-Tailed DistributionsYour insurance budget survives hundreds of ordinary claims, then one warehouse fire costs more than all of them put together.
- No. 0551 Law of Large NumbersYour first ten coin flips produce eight heads, and you start wondering whether the coin is fair.
- No. 0556 Leading vs. Lagging IndicatorYour support dashboard stays green all week, but unanswered tickets are piling up before customers start canceling.
- No. 0589 Map vs. TerritoryYour phone says the path continues, but you’re standing in front of a locked gate.
- No. 0864 Risk vs. UncertaintyYour spreadsheet gives a new store a 12% chance of failure, though nobody can explain where the 12% came from.