Don’t let your System 1 judge this post.

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Here are 5 books that will strengthen your decision-making skills. They will hopefully make your two systems of cognitive processes better, enhancing both your intuitive and deliberate thinking. Below you will find my reasons of why you should reach each one of them together with a quote to nudge you to do so. My best recommendation is to read them slowly while applying what you learn into your everyday life.

PREDICTABLY IRRATIONAL | DAN ARIELY


With Legos

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Unsplash

The other day while playing with my nephew and his Legos I came up with an idea to try to explain him what permutations are. Basically, a permutation of a set of objects is a way of ordering them. For example, for a set of 3 objects (let’s name them A, B, and C) we have the following 6 permutations:

ABC | BAC | CAB
ACB | BCA | CBA

Now that we know what permutations are, let’s follow the example I used with my nephew.

THE EXAMPLE

Here’s a representation of my nephew’s Lego Volkswagen with 8 seats to…


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A simple formula to assist you in figuring out the expected value of something

According to the prolific polymath Daniel Bernoulli, the expected value of something can be calculated as follows:

Expected value = Odds of Gain x Value of Gain

Essentially, Bernoulli suggested that if we can accurately estimate these two products, we will always know precisely how we should behave.

Let me illustrate his formula with an example. Imagine I offer you playing a coin toss. If it comes up heads you win 10€. Should you pay 4€ to play?

Following Bernoulli’s formula:

Expected Value = Odds of Gain x Value of Gain
Odds of Gain = 1/2 = 0.5
Value of Gain = 10€
Expected value = 0.5 …


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Meeting time!

When it comes to holding meetings, the physical table and the seating arrangement play a substantial role in the exchange of knowledge.

That’s what Ed Catmull, former president of Pixar Animation and Disney animation, realized more than a decade after he and his team started having regular meetings about the development of Pixar’s movies in which about thirty employees were facing off two lines at a table similar to the one depicted below.


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If prospect theory had a flag, the image above would be drawn on it wrote Daniel Kahneman in his book Thinking Fast and Slow referring to the theory that he and Amos Tversky developed in 1979 and that was many years after awarded the Nobel prize in economics in 2002. Here is my attempt to explain the core concepts of this theory in less 3 minutes.

1. Evaluation is relative to a neutral reference point We assign gains and losses in terms of outcomes depending on our individual and unique view of those outcomes. Outcomes that are better than the…


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My attempt to illustrate regression to the mean

Picture this situation: You are the business analyst for a department store chain. All stores are similar in size and merchandise selection, but their sales differ because of location, competition, and random factors. You are given the results for 2018 and asked to forecast sales for 2019. You have been instructed to accept the overall forecast of economists that sales will increase overall by 10%. How would you complete the following data?

Store — 2018 $ Sales — 2019 $ Sales

1 — $1,000,000 —
2 — $10,000,000 —
3 — $2,000,000 —
4 — $15,000,000 —
5 — $20,000,000—…


Human Bias in recruitment selection — Case Study I

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Credits: Jupiterimages

INTRODUCTION

The startup XYZ has dramatically increased its workforce in the last year. Now, it wants to incorporate a People Analyst as part of its new strategy to keep on scaling its business while maintaining an accurate hiring process that will positively contribute to future company-decisions. As the new People Analyst, you take the lead to start exploring, in quantitative terms, the hiring process of this fast-growing company.

DATA COLLECTION

The first step of this new task is collecting employee data from this company in terms of its hiring process, from the applicant pool to those who finally joined XYZ.

Pablo Alvarez

Lifelong Learner | Msc Learning & Development in Organizations

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