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What is the total amount of money contained in this bottle full of nickels?

What is the total amount of money contained in this bottle full of nickels?. Why Averaging Works. Case I: Estimates Bracket the Truth. Absolute Estimate Deviation Person 1 22 |22 – 68.95| = 46.95 Person 2 106 |106 – 68.95| = 37.05

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What is the total amount of money contained in this bottle full of nickels?

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  1. What is the total amount of money contained in this bottle full of nickels? avg2v2 J. Soll, Duke University, 2006

  2. Why Averaging Works avg2v2 J. Soll, Duke University, 2006

  3. Case I: Estimates Bracket the Truth Absolute Estimate Deviation Person 1 22 |22 – 68.95| = 46.95 Person 2 106 |106 – 68.95| = 37.05 Average of the Individual Deviations: (46.95 + 37.05)/2 = 42 Average Estimate: 64 Absolute Deviation of the Average Estimate: |64 – 68.95| = 4.95 avg2v2 J. Soll, Duke University, 2006

  4. Case II: Estimates Don’t Bracket the Truth Absolute Estimate Deviation Person 1 100 |100 – 68.95| = 31.05 Person 2 80 |80 – 68.95| = 11.05 Average of the Individual Deviations: (31.05 + 11.05)/2 = 21.05 Average Estimate: 90 Absolute Deviation of the Average Estimate: |90 – 68.95| = 21.05 avg2v2 J. Soll, Duke University, 2006

  5. Why Averaging Works • If estimates bracket, averaging beats the average accuracy of individuals • If they don’t bracket, averaging ties the average accuracy of individuals • Therefore, average performance in a group sets a lower bound for the performance of the composite! • This logic extends easily to the case of n individuals avg2v2 J. Soll, Duke University, 2006

  6. Deciding Whether to Averagesome factors to consider in analyzing your context • Differences in Expertise • Omit anyone who is twice as bad as someone else • Ten to twelve estimates is sufficient • Bracketing Rate • It’s affected by • Differences in information • Differences in training • Differences in perspective • If it’s likely that everyone is on same side of truth, averaging will only “lock in” the average performance. • Chances of identifying the expert • Common cues include confidence, experience, academic degrees • In many situations, these cues are only weakly correlated with performance avg2v2 J. Soll, Duke University, 2006

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