Learning is conspicuous in human existence.
By learning, we mean that people change expectations/understandings based on the observed outcome of actions, using two mechanisms: low-intellect (simple replication of success) and high-intellect (fitting a causal model to experience).
These learning mechanisms lead to improvement under certain conditions
- Relatively constrained activities + repeated frequently, ex: production learning curves, continuing relationships among people, and the development of technical/artistic skills
- This means a high signal to noise ratio and a large sample size
- Performance is improved but not necessarily optimal and has limited generalisability
- Same as for machines!
Novelty generation is required for the long-run effectiveness of learning from experience. It is threatened by effective learning, but can also be engineered.
In other conditions, experience is not a good teacher (by that we mean reliably improving performance).
- Vividness of direct experience leads to exaggeration of the information content therein
- The inherent ambiguity of experience makes it hard to learn from.
1. Complex causal structure makes unjustified conclusions, superstitious associations, misleading correlations, tautological generalisations, and systematic biases all more likely!
2. History is but a single instance from a distribution, which is a poor representation of the distribution. Counterfacturals can only be generated using imagination...
3. History is path-dependent: one earlier choice could influence downstream outcomes
4. History is not "pure observations", it is stories that we tell ourselves, concocted for a purpose
5. History has a terribly small sample size
6. Given such a complex system, effect detection requires holding other things constant and make a big enough change, but we tend to change many things simultaneously and to make small changes...
The ambiguity of experience means that the same experience can be interpreted in many different ways. Also, there is a tendency to use a catch-all term to explain everything that is not explained, providing an appearance of explanatory power. Ex: personality in psychology, culture in sociology/anthropology, uplift in power price forecasting.
The actual state of knowledge in oranisations:
1. A collection of theorems derived from a few elementary propositions about human behaviour
2. An engineering conception of knowledge as opposed to a scientific one: Scientific: understand system well enough to anticipate outcome of any possible antecedents vs. Engineering: seeks set of antecedents to produce a particular outcome
3. Instead of seeking to understand a complex word, orgs try to manage it using tools such as contracts, insurance, and hedges
But, in those cases, interpretation of experience has purposes other than increasing our predictive power, notably the creation and decoration of irrelevant understanding (our intellectual plumage) to show off the grace of our storytelling and the elegance of our models, an essential/fundamental human activity.