Noise and Kahneman's HBR Books (Daniel Kahneman, Olivier Sibony, Cass R. Sunstein)

Trader's Library #62 · Risk, chance and decisions. Why the same decisions turn out differently, and how to fix it with rules.

Author: Daniel Kahneman, Olivier Sibony, Cass R. Sunstein · Original: Noise · Year: 2021 · Usefulness for traders: ★★★☆☆

What it's about

A book about noise – unwanted variability in judgements: the same experts on the same case reach different verdicts depending on the time of day, their mood or the order of cases. I also cover two “HBR's 10 Must Reads” collections (on innovation and decision-making), which include a piece by Kahneman.

What it gives a trader

For a trader it's an argument for rules and checklists: your decisions in the same situations are less consistent than you think. A simple grading system and fixed criteria reduce noise.

Lessons for traders

• same situation, different decisions: that's noise, not flexibility
• checklists and rules reduce the variability of judgements
• fatigue and mood affect decisions (mood and weather, Atlas of biases #52)

What to watch out for

The book can be repetitive. The HBR collections are short management articles.

Discussion

The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →

Navigation

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Educational content, not investment advice. The book description is my own summary and assessment, not quotations. Edition details were checked in catalogues and bookshops, and where there was doubt I said so plainly.