Franck Schuurmans, a guest lecturer at the Wharton Business School at the University of Pennsylvania, has captivated audiences with explanations of why people make irrational business decisions. A simple exercise he uses in his lectures is to provide a list of 10 questions such as, “In what year was Mozart born?” The task is to select a range of possible answers so that you have 90 percent confidence that the correct answer falls in your chosen range. Mozart was born in 1756, so for example, you could narrowly select 1730 to 1770, or you could more broadly select 1600 to 1900. The range is your choice. Surprisingly, the vast majority choose correctly for no more than five of the 10 questions. Why score so poorly? Most choose too narrow bounds. The lesson is that people have an innate desire to be correct despite having no penalty for being wrong.
Gary Cokins writing for icrunchdata News