Why Humans Struggle with Forecasting
In his book Narratives and Numbers, the internet's king of valuation Aswath Damodaran explains why it's so easy for humans to be drawn to numbers.
In a world of uncertainty, numbers offer us a sense of precision and objectivity and provide a counterweight to storytelling. That precision is often illusory, and there are uncountable ways in which bias can find its way into numbers. Notwithstanding those limitations, in investing and finance, as in many other disciplines, the number crunchers or "quants" have essentially used the power of numbers to both inform and intimidate. The crisis of 2008 was a cautionary note to those who would let common sense be overwhelmed by complex mathematical models.
Source: Aswath Damodaran | Narrative and Numbers: The Value of Stories in Bus | 1/10/2017 | p. 4 | Visit