Inside View uses specific details, Outside View uses base rates

• context: failed project due to overoptimism
• lessons learned
  • inside and outside view
  • Planning Fallacy, we predict ideal scenarios instead of consulting distributional data
  • Belief Perseverance
• Inside view: making predictions based on your understanding of the details of the process
  • doesn’t take into account the “unknown of the unknown”
  • probability that something goes wrong in a big project is high
• Outside view: using estimates based on a class of roughly similar previous cases
  • usually statistics are discarded when they are incompatible with our personal impressions

See also

• Planning Fallacy, we predict ideal scenarios instead of consulting distributional data — the planning fallacy is the systematic consequence of relying on the inside view: we plan for the ideal scenario, ignoring the distributional information available from past projects
• Optimism Bias drives entrepreneurial dynamism but distorts risk assessment — the inside view is amplified by optimism bias: we ignore base rates not just because we don’t know them but because they conflict with our optimistic self-assessment
• Correcting Intuitive Predictions Means Regressing Toward the Mean Proportionally to the Evidence Correlation — the four-step framework formalises the combination of both views: outside view provides step 1, inside view provides step 2
• Hindsight Bias, after the outcome we believe we knew it all along and cannot recall our prior belifs — the inside view is what creates hindsight bias: we construct a causal narrative from specific details that makes the outcome feel predictable in retrospect

References

• https://www.lesswrong.com/w/inside-outside-view
• Pensieri lenti e veloci - Daniel Kahneman