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Uncertainties impacting reserves, revenue, and costs (view source)
Revision as of 16:53, 10 January 2014
, 16:53, 10 January 2014→Biases in estimating
==Biases in estimating==
==Biases in estimating==
[[File:Table rose time-value-of-money 1.jpg|thumbnail|'''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:
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:
# ''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>
The use of multiple independent estimators utilizing the same database, will go far toward reducing these various biases and producing accurate and consistent estimates. Also, systematic record keeping of geotechnical predictions versus outcomes and periodic review of such "before and after" data has proved to be helpful.
The use of multiple independent estimators utilizing the same database, will go far toward reducing these various biases and producing accurate and consistent estimates. Also, systematic record keeping of geotechnical predictions versus outcomes and periodic review of such "before and after" data has proved to be helpful.
==Lognormality and log probability paper==
==Lognormality and log probability paper==