![]() ![]() While formal information may exist in the form of statistical data from organizations like the World Bank and consulting firms, the information which is most easily brought to mind is from the people we happen to have met, or from the media. When we look at markets different from our own we often have little information. In business we frequently market to consumers whose experiences are far removed from ours and so we often make assumptions about how these consumers behave. Mis-estimation is not restricted to predicting danger. With unfamiliar, low probability events, disproportionate media coverage can lead to gross estimation errors. We have the TV special Shark Week and movies like Jaws to remind us of the danger of sharks, but there is no Airplane Debris Week. Why does this happen? Events are perceived as more likely to occur if they are easier to bring to mind. (In fact, you are 30 times more likely to die from a piece of falling airplane than you are at the jaws of a shark.) We have tested this query with senior executives across multiple continents, and they inevitably get it wrong. Which is the more likely cause of death - shark attack or falling airplane parts? The answer to Nobel prize winning psychologist Daniel Kahnemann’s question is surprising falling airplane parts. ![]()
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