Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 20, Issue 20;   May 13, 2020: Neglect of Probability

Neglect of Probability


Neglect of Probability is a cognitive bias that leads to poor decisions. The risk of poor decisions is elevated when we must select an option from a set in which some have outstandingly preferable possible outcomes with low probabilities of occurring.
Matt Schaub, as quarterback for the American football team known as the Houston Texans

Matt Schaub, as quarterback for the American football team known as the Houston Texans, about to deliver a pass. American professional football provides another example of neglect of probability. As I approach secondary school graduation, I receive offers for both a full athletic scholarship as a football player at one institution with a championship football team, and a full academic scholarship at another institution with a leading program in Computer Science. The athletic scholarship has the largest post-graduation upside if I can avoid injury and play well enough to be drafted by a professional team. But according to the U.S. National Collegiate Athletic Association, the probability of selection by a pro football team is 1.6%. This is low compared to the probability of a Computer Science graduate landing a high-paying job — 80% or more. Nevertheless, many choose the athletic scholarship over the academic scholarship. They neglect probability. In this example, the probabilities have a significant effect on the expected value of the outcome of each choice.

When we've made a decision that has led to serious trouble, it's possible that a cognitive bias known as neglect of probability might have played a role. This cognitive bias can affect decision making by causing us to choose among options based solely on the values of the respective "best outcomes," respectively, of those options. Using this criterion leads to trouble when the outcomes of the options are uncertain, because it ignores the probabilities of actually achieving those outcomes.

Stated a Neglect of Probability causes us
to choose among options based
solely on the values of their
respective "best outcomes,"
ignoring the likelihood of those
outcomes actually coming about
bit more precisely, a rational decision would be based on considering both the value of an option's potential outcome and the probability of actually generating that outcome. Instead, when we're under the spell of Neglect of Probability, we tend to assess the goodness of an option by focusing solely (or excessively) on the value of its best outcome, while ignoring the probability of achieving that outcome.

An illustration might clarify this effect further.

The IT department at Dewey, Cheatham and Howe, LLP, (a fictitious global law firm), is upgrading the operating systems of DCH's fleet of personal computers from PC-OS 11 to PC-OS 12 (a fictitious operating system). The task would be relatively straightforward were it not for the enormous number of commercial and custom applications running on those computers. DCH's experts expect that the change from PC-OS 11 to PC-OS 12 will render many of those applications unusable. Among the 18,000 total applications, most are expected to operate correctly, but many will not. The full list of questionable applications is unknown.

Testing all 18,000 applications is an impractically large effort. But by working with the vendors of the commercial applications, and by collaborating with IT departments in other law firms, DCH has reduced the number of applications whose status is unknown to a mere 1,500. That number is less daunting, but it's still impossibly large.

IT has therefore decided to let users of each of the questionable applications perform the testing and certification, in three stages. In Phase I an application expert checks that the app operates in PC-OS 12. If it does, then in Phase II for that app, 10% of the app's users are authorized to use the app for up to 30 days. If they report no problems, then the app is cleared for Phase III, general use. If the Phase II users do report problems, usage of that app is suspended and IT works with the vendor or internal author to resolve the issue. When the issue is resolved, the app is returned to Phase II for another 30 days and the procedure repeats until the app is cleared.

In this way, IT can reduce the number of apps that need more thorough testing. And when an app functions properly, the cost of determining that it does so is very low. These cost-control features are very attractive to IT decision makers.

But there's a problem with this approach. In the 30 days during which Phase II users operate untested apps, those untested apps might corrupt existing data or documents, without the knowledge of the users of the apps. Based on prior experience with PC-OS 10, this corruption is almost certain to occur in many apps. Therefore, the probability of a successful outcome for IT's intended three-phase approach is very low. But the decision makers in IT who conceived of this plan are neglecting the probability of that good outcome. They're attracted by the low cost of the best outcome, and that has caused them to ignore the fact that some applications — IT knows not which ones — will almost certainly cause data corruption. In this example, IT's approach might have a very good outcome, but the probability of that outcome is small.

Neglect of Probability is most likely to play a role in decision making when the decision-making scenario involves choosing among a set of options, some of which have outcomes very much more attractive than others. In these decision-making scenarios, Neglect of Probability tends to cause the decision makers to choose options with too little regard for — or without regard for — the probabilities of success of the various options.

And even when decision makers do consider probabilities, the risk of a poor decision remains unacceptably high for some kinds of mission-critical decisions. Decision makers might in some cases estimate probabilities in a biased way that tends to favor the options with the outcomes they find most appealing. There are indeed many ways to mess things up. Go to top Top  Next issue: Hidden Missions  Next Issue

52 Tips for Leaders of Project-Oriented OrganizationsAre your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!

Your comments are welcome

Would you like to see your comments posted here? rbrendPtoGuFOkTSMQOzxner@ChacEgGqaylUnkmwIkkwoCanyon.comSend me your comments by email, or by Web form.

About Point Lookout

This article in its entirety was written by a 
          human being. No machine intelligence was involved in any way.Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

This article in its entirety was written by a human being. No machine intelligence was involved in any way.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Cognitive Biases at Work:

A visual illusionScope Creep and the Planning Fallacy
Much is known about scope creep, but it nevertheless occurs with such alarming frequency that in some organizations, it's a certainty. Perhaps what keeps us from controlling it better is that its causes can't be addressed with management methodology. Its causes might be, in part, psychological.
Braided streams in Grewingk Glacier RiverRisk Acceptance: One Path
When a project team decides to accept a risk, and when their project eventually experiences that risk, a natural question arises: What were they thinking? Cognitive biases, other psychological phenomena, and organizational dysfunction all can play roles.
A drone carrying a camera, flying under remote controlIllusory Management: I
Many believe that managers control organizational performance, but a puzzle emerges when we consider the phenomena managers clearly cannot control. Why do we believe in Management control when the phenomena Management cannot control are so many and powerful?
Adolf Hitler, dictator of Germany and leader of the Nazi party 1934-1945Confirmation Bias and Myside Bias
Although we regard ourselves as rational, a well-established body of knowledge shows that rationality plays a less-than-central role in our decision-making process. Confirmation Bias and Myside Bias are two cognitive biases that influence our decisions.
Benjamin Franklin portrait by Joseph Siffred DuplessisClouted Thinking
When we say that people have "clout" we mean that they have more organizational power or social influence than most others do. But when people with clout try to use it in realms beyond those in which they've earned it, trouble looms.

See also Cognitive Biases at Work and Critical Thinking at Work for more related articles.

Forthcoming issues of Point Lookout

A well-festooned utility poleComing June 26: Additive bias…or Not: I
When we alter existing systems to enhance them, we tend to favor adding components even when subtracting might be better. This effect has been attributed to a cognitive bias known as additive bias. But other forces more important might be afoot. Available here and by RSS on June 26.
A close-up view of a chipseal road surfaceAnd on July 3: Additive bias…Not: II
Additive bias is a cognitive bias that many believe contributes to bloat of commercial products. When we change products to make them more capable, additive bias might not play a role, because economic considerations sometimes favor additive approaches. Available here and by RSS on July 3.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrendPtoGuFOkTSMQOzxner@ChacEgGqaylUnkmwIkkwoCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

Reprinting this article

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500-1000 words in your inbox in one hour. License any article from this Web site. More info

Follow Rick

Send email or subscribe to one of my newsletters Follow me at LinkedIn Follow me at X, or share a post Subscribe to RSS feeds Subscribe to RSS feeds
The message of Point Lookout is unique. Help get the message out. Please donate to help keep Point Lookout available for free to everyone.
Technical Debt for Policymakers BlogMy blog, Technical Debt for Policymakers, offers resources, insights, and conversations of interest to policymakers who are concerned with managing technical debt within their organizations. Get the millstone of technical debt off the neck of your organization!
Go For It: Sometimes It's Easier If You RunBad boss, long commute, troubling ethical questions, hateful colleague? Learn what we can do when we love the work but not the job.
303 Tips for Virtual and Global TeamsLearn how to make your virtual global team sing.
101 Tips for Managing ChangeAre you managing a change effort that faces rampant cynicism, passive non-cooperation, or maybe even outright revolt?
101 Tips for Effective MeetingsLearn how to make meetings more productive — and more rare.
Exchange your "personal trade secrets" — the tips, tricks and techniques that make you an ace — with other aces, anonymously. Visit the Library of Personal Trade Secrets.
If your teams don't yet consistently achieve state-of-the-art teamwork, check out this catalog. Help is just a few clicks/taps away!
Ebooks, booklets and tip books on project management, conflict, writing email, effective meetings and more.