A foundational term in modern behavioral economics and decision theory. 3 mins read.
While cognitive bias refers to a systematic error that skews judgments in a specific direction, noise is the unpredictable, erratic variability of those judgments. If we visualize a target, bias is when all the shots miss the bullseye in the same direction (e.g., clustered to the top-right). Noise is when the shots are wildly scattered across the entire target. Both lead to poor outcomes, but noise is far harder to spot because it lacks a clear pattern or direction.
In human organizations, noise operates as a silent tax. Because humans are highly susceptible to internal and external environmental changes—such as mood, fatigue, weather, or time of day—their decisions fluctuate constantly. When multiple experts look at the exact same data and arrive at wildly different conclusions, the system is suffering from high noise. Reducing noise requires implementing structured guidelines, algorithms, and decision hygiene practices to strip away the erratic influence of human subjectivity.
Primary Source
Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein, Noise: A Flaw in Human Judgment (2021).
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