Humans rely on simplifications (heuristics) when forced to make a decision with insufficient information or time to analyze the outcomes. However, these decisions are rarely logical or rational - resulting in mistakes.
Why this matters: Artificial intelligence and data science are going to play an increasingly large role in your decision-making. 67% of executives say AI will help humans and machines work together to be stronger using both artificial and human intelligence. Source: PWC, 2018 AI Predictions
Because of the advent of AI and increased access to data, we’re often going to feel like we have plenty of information to make a good decision: but the situation may be that we may have too much data and too little time - resulting in information overload. Or just as bad, we may make critical decisions based on summarized data, without taking the time to determine how those conclusions were arrived at.
Be smart: There are three things we can do to avoid falling into this trap.
Avoid Confirmation Bias - Actively look for the data that counters your beliefs. Likewise, understand and counter the biases of those that are providing the results you’re counting on.
Avoid Overconfidence - Track your predictions about the data and systematically compare them to the results. This will help prevent working off the “last correct prediction”.
Avoid Over-fitting - This is giving too much importance to data that fits the model, but isn’t predictive of the future. To counter this, break the data down into smaller sets and avoid cherry-picking.