In his new book Thinking, Fast and Slow, Daniel Kahneman talks about the work he and his colleague Amos Tversky did on Prospect Theory. Their work over-turned Bernoulli economic theory of expected utility.
Looking back on it, Kahneman wondered why something that is so obvious as a counter example to Bernoulli’s theory could have escaped notice for over a hundred years. He then goes on to say “I can explain it only by a weakness of the scholarly mind that I have often observed in myself. I call it theory-induced blindness: once you have accepted a theory and used it as a tool in your thinking, it is extraordinarily difficult to notice its flaws.”
Of course Kahneman is not the first to notice this. Einstein said “It is the theory that decides what can be observed.” I pointed this out in my book Advantage. I further point out that he also said , “The only thing that interferes with my learning is my education.” He knew his ability to see something new depended on not embracing what was already there.
Kahneman is right about this theory-induced blindness, but it doesn’t only affect the scholarly mind. We all suffer from this phenomenon. People in companies who have been doing the same thing over and over again have a hard time seeing alternatives. It is why we can go into a company, see what they’re doing and wonder why they are doing something that is clearly not effective. When someone is newly employed by a company, comes in and observes the ineffectiveness of something and offers a suggestion, it us usually rejected out-of-hand. It takes a surprising amount of work to get people in the company to take on a different perspective. Long held beliefs fund their own truth.