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==Biases in estimating==

==Biases in estimating==

[[File:Table rose time-value-of-money 1.jpg|thumbnail|'''Table 1.''' Biases affecting judgments under uncertainty.]]

Unfortunately, a number of psychological biases exist, many of which are described by Tversky and Kahneman,<ref name=Tversky_etal_1981>Tversky, A., and D. Kahneman, 1981, The framing of decisions and the psychology of choice: Science, v. 211, p. 453-458.</ref> that tend to produce inconsistencies whenever we estimate under uncertainty (Table 1).  

Unfortunately, a number of psychological biases exist, many of which are described by Tversky and Kahneman,<ref name=Tversky_etal_1981>Tversky, A., and D. Kahneman, 1981, The framing of decisions and the psychology of choice: Science, v. 211, p. 453-458.</ref> that tend to produce inconsistencies whenever we estimate under uncertainty ([[:Image:Table_rose_time-value-of-money_1.jpg|Table 1]]). For the development geologist, three such biases are especially dangerous:

! Type of bias || Common example

| Overconfidence || Estimators are much less accurate than they think they are.

| Availability || Recent or spectacular examples are more prone to be cited, regardless of their real frequency in nature.

| Anchoring || In estimating, a low starting point leads to a lower final estimate, and a high starting point leads to a higher final estimate.

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| Unrecognized limits || Geologists forecasting future discoveries may disregard nongeological factors.  

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| Motivation || Prospectors exaggerate the magnitude of reserves in order to sell the deal.

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| Conservatism || The feeling that overestimating a project is worse than underestimating it.

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For the development geologist, three such biases are especially dangerous:

# ''Overconfidence,'' which leads to excessively narrow ranges. People naturally tend to set predictive ranges that typically correspond to a confidence significantly lower than the ranges they think they are setting.<ref name=Capen_1976>Capen, E. C., 1976, The difficulty of assessing uncertainty: Journal of Petroleum Technology, v. 28, p. 843-850.</ref>

# ''Overconfidence,'' which leads to excessively narrow ranges. People naturally tend to set predictive ranges that typically correspond to a confidence significantly lower than the ranges they think they are setting.<ref name=Capen_1976>Capen, E. C., 1976, The difficulty of assessing uncertainty: Journal of Petroleum Technology, v. 28, p. 843-850.</ref>

# ''Conservatism,'' which leads to underestimates because professionals, fearing criticism, may feel it is worse to overestimate a project than to underestimate it.<ref name=Rose_1987>Rose, P. R., 1987, [http://archives.datapages.com/data/bulletns/1986-87/data/pg/0071/0001/0000/0001.htm Dealing with risk and uncertainty in exploration--how can we improve?]: AAPG Bulletin, v. 71, n. 1, p. 1-16.</ref>

# ''Conservatism,'' which leads to underestimates because professionals, fearing criticism, may feel it is worse to overestimate a project than to underestimate it.<ref name=Rose_1987>Rose, P. R., 1987, [http://archives.datapages.com/data/bulletns/1986-87/data/pg/0071/0001/0000/0001.htm Dealing with risk and uncertainty in exploration--how can we improve?]: AAPG Bulletin, v. 71, n. 1, p. 1-16.</ref>