Jumping to Conclusions: With Guests David Silbey & Ned Augenblick

October 9, 2023
Why do people tend to over-respond to weak signals and under-respond to strong ones?
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After you listen

  • For help decoding complex financial concepts and the specific decisions we make in our financial lives, including the biases explored on Choiceology, check out the Financial Decoder podcast.
  • For help decoding complex financial concepts and the specific decisions we make in our financial lives, including the biases explored on Choiceology, check out the Financial Decoder podcast.

A train was speeding along the tracks in 19th-century England when a passenger suddenly started smashing windows and waving a pistol in the air. People believed his actions were caused by what was, at the time, a new and unfamiliar form of transportation. Doctors posited the rattling motion and noise of trains could cause passengers to act erratically, creating the short-lived but popular myth of "railway madness."

In this episode of Choiceology with Katy Milkman, we look at how people often overreact to poor quality or incomplete information.

A sudden explosion in 1889 ripped apart the USS Maine, the United States' largest warship at the time. The ship sank, killing more than half of the sailors on board. The Maine had been anchored in Cuba, and despite having little proof, the American public immediately blamed the Spanish for the sinking. Newspaper editors published headlines such as "Remember the Maine, to Hell with Spain!" Nearly a hundred years later, an underwater investigation would reveal what likely caused the explosion.

Historian David Silbey recounts how public pressure from this tragedy pushed the United States to make a decision that would have lasting consequences for the world.

David Silbey is a military historian and adjunct professor and director of teaching and learning at Cornell University. He is also the author of A War of Frontier and Empire: The Philippine-American War, 1899-1902. His new book is called Wars Civil and Great: The American Experience in the Civil War and World War I.

Next, Katy speaks with Ned Augenblick about his research that shows people's tendency to overreact to weakly supported information and underreact to strongly supported information.

You can read more in the paper he co-authored with Eben Lazarus and Michael Thaler, called "Overinference from Weak Signals and Underinference from Strong Signals."

Ned Augenblick is a professor in the Economic Analysis and Policy Group at the Haas School of Business at the University of California, Berkeley.

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