Extreme performances tend to be followed by more average ones, not because of any causal intervention but due to statistical randomness.
When performance has a random component, extreme outcomes are likely to be followed by less extreme ones. A student who scores exceptionally high on one test will likely score lower (but still above average) on the next test, not because they got worse but because the first score included lucky randomness. We systematically misinterpret regression to the mean as causal: we think punishment works because poor performance (which was partly unlucky) is followed by improvement, and we think praise doesn't work because great performance (which was partly lucky) is followed by decline.
A company's best-performing division one year often performs worse the next year, leading executives to blame the manager. In reality, the initial performance included lucky randomness, and regression to the mean is expected.
Extreme performances followed by average ones indicate a causal change—this pattern is expected from randomness alone, without any intervention.
Logically equivalent choices produce different decisions when framed differently (as gains vs. losses, or with different reference points).
PrincipleContinuing an endeavor because of previously invested resources (time, money, effort) that cannot be recovered, even when continuing is irrational.
PrincipleFast, automatic, unconscious cognitive processing that operates through pattern recognition and associative memory without deliberate effort.
Mental ModelSlow, effortful, conscious cognitive processing required for complex calculations, unfamiliar tasks, and deliberate reasoning.
Mental ModelThe tendency to rely too heavily on the first piece of information encountered (the anchor) when making decisions, even when it's arbitrary or irrelevant.
PrincipleJudging the frequency or probability of events by how easily examples come to mind, leading to overestimation of vivid, recent, or emotional events.
PrincipleJudging probability by similarity to stereotypes or prototypes, while ignoring base rates and sample size.
PrincipleWhen faced with a difficult question, System 1 automatically substitutes an easier question without conscious awareness of the switch.
FrameworkExtreme performances tend to be followed by more average ones, not because of any causal intervention but due to statistical randomness.
A company's best-performing division one year often performs worse the next year, leading executives to blame the manager. In reality, the initial performance included lucky randomness, and regression to the mean is expected.
Extreme performances followed by average ones indicate a causal change—this pattern is expected from randomness alone, without any intervention.
Regression to the Mean is explored in depth in "Thinking, Fast and Slow" by Daniel Kahneman. Distilo provides a deep AI-powered analysis with key insights, audio narration, and practical frameworks.