When intuition fails

In the book The Drunkards Walk, author explains that "If the details we are given fit our mental picture of something, then the more details in a scenario, the more real it seems and hence the more probable we consider it to be—even though any act of adding less-than-certain details to a conjecture makes the conjecture less probable.

This inconsistency between the logic of probability and our assessments of uncertain events can lead to unfair or mistaken assessments in real-life situations. Which is more likely: that a defendant, after discovering the body, left the scene of the crime or that a defendant, after discovering the body, left the scene of the crime because he feared being accused of the grisly murder? Is it more probable that the president will increase federal aid to education or that he or she will increase federal aid to education with funding freed by cutting other aid to the states? Is it more likely that your company will increase sales next year or that it will increase sales next year because the overall economy has had a banner year?

In each case, even though the latter is less probable than the former, it may sound more likely. "

Full Disclaimer: I am not a financial planner. The views expressed in this post are all mine and they may or may not suit your needs. Please do you own due diligence. I do not make money on any of the products suggested in this post. 

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