I get it. You trust yourself more than other people and if someone comes to you with new information, you are inherently sceptical about it. But why would you discount something that you have seen with your own eyes?
A group of researchers has created some lab experiments that I find extremely fascinating mostly because they are so counterintuitive.
First, they let people draw balls from an urn filled with balls of two different colours. After drawing a ball, the participants had to put the ball back again and draw another one. After five draws, they had to estimate how many balls of each colour were in the urn. So far so textbook. Then, the participants were randomly paired into groups and their partners told them how many balls of each colour they thought were in the urn. As you might have guessed, when asked to submit a final guess to the experimenter, they relied more on their own guess than the information of their partner. In fact, they discounted the information from their partner’s draw by about 17% compared to their own experience.
But now imagine a situation where the participants had to first draw their balls and then watch the other participant draw his balls. These participants experienced their partner’s draws first-hand, only that their partner pulled out the balls rather than them themselves. And before you ask, this wasn’t a real urn with real balls but a digital urn on a computer screen where one had to click on the screen to draw a ball. So, it was impossible for the partner to pull some magic trick and switch balls etc.
You’d think that if you see something with your own eyes you would believe it as much as if you do it yourself. But no. The participants who watched their partner draw balls from the urn still discounted their draws by about 17% compared to their own draws. It was only when the computer did all the work for both participants, i.e. drawing balls automatically and labelling them as “your first ball”, vs. “your partner’s first ball”, etc. that the disbelief disappeared.
I have no idea what is going on there and neither have the researchers who performed the study. But if these results are correct, they have potentially significant consequences on how we learn (or don’t learn) from others. What again is the emoji for ‘mind blown’? 🤯
Information weight given to own experience vs. other person’s experience
Source: Conlon et al. (2022)
In general: great thing these short blogs that bring a complex academic treatise to the point. For me as a Swiss, this is not always the case with Germans :-). No, really hats off to fill this blog almost daily..really strong! A question about this article, what would be (from your perspective) their first deduction from it for investing / stock market? Thank you very much and hope for many more insights from the mountains of numbers that you have worked on. Best Regards Andi