Category: TFS Project
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TFS: In direct marketing, don’t forget to leave some behind
You would think that as much as I embrace the principles of direct marketing, that I would remember to create control groups in order to test my efforts. My time is so much more valuable than my money. So every effort I make must be carefully scrutinized for its value. If I don't split the…
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TFS: Beware the lucky dog
In making decisions, we avoid variance. We want to bet on a sure thing. And yet, our desire to win often overcomes us. We pick a stock or a job candidate or a restaurant because it was recently successful. We pay less attention than we should to its track record. We think we have this…
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TFS: Making up stories to remember the truth
Our brains are not wired to quickly grasp statistical realities. We crave cause and effect. Over the centuries some of our best thinkers have tried to help us grasp reality by inventing metaphors and stories that will stick in our mind, such as the "random walk." (Whether or not you believe that stock prices behave…
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Don’t swallow the story
The latest trend in advertising is to tell more stories. Of course, great advertising has always relied on stories, but direct marketing has often been very mechanical. Storytelling classes are now being promoted, and story templates can be purchased. Daniel Kahneman points out that plausibility often trumps logic. Our System 1 mind craves coherence and…
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TFS: Why you should think like a loser
Often, prejudicial thinking falls under the "Sin of Representativeness." We estimate the probability of success based on whether someone looks like a winner. How can you avoid prejudicial hiring? We are naturally drawn to likeable candidates that fit our expectations. Daniel Kahneman: Thinking, Fast and Slow: You surely understand in principle that worthless information should…
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TFS: How Availability Bias can make us act squirrely
Such a big part of being a good entrepreneur and/or being a good marketer is about objectively evaluating risk. Most of the public discourse about availability cascades focuses on the use of public funds, but private funds can be used imprudently as well. The correct management of risk is to recognize both the probability of…
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TFS: Getting better forecasts by crushing availability bias
Daniel Kahneman says the biggest hurdle to eliminating "availability bias" is that it requires a tireseome amount of effort. You have to second-guess yourself all the time. But if you make the effort, you may improve your quality of life. Don't avoid that short cut just because your car had a flat there yesterday. Don't…
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TFS: Recognizing Anchors
An anchor is a piece of irrelevant data which influences decisions. Research has shown that once a person has been exposed to an anchor, avoiding the influence of that anchor is nearly impossible. Although sellers often use asking-price anchors to manipulate people, they are pretty much trapped if the buyer demands one. Check out the…
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TFS: How to avoid bad samples
One of the most common errors in my profession is making a decision based on a small sample, a too-small sample. So how do we know if the sample is too small? We can make the decision rationally, like a scientist, using System 2 thinking. Or we can go with our gut, which says no…
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TFS: Work on not knowing
While our System 2 mind works intentionally to find the correct or best answer, our System 1 mind is constantly assessing the environment, looking for threats, cues, and change. System 1 doesn't have any intention and no agenda other than awareness. It's impossible to not know what System 1 thinks about your environment. It supports…
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