How sure are you, really?
Ten questions, one range each. Find out how often a range you were 90% sure about actually held the answer, and what that says about the stops you choose.
Free, takes about three minutes, and nothing you enter leaves your device. The questions are general knowledge, not markets, so there is no edge to hide behind.
Give a range you would bet on.
For each question, enter a low and a high number so that you are 90% sure the true answer sits between them. Not a guess. A range wide enough that you would be surprised to find the answer outside it.
Your result
So about 9 in 10 should have held.
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Your answers
What you said, and what the answer was.
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The research behind it
- Alpert, M., and Raiffa, H. (1982). A progress report on the training of probability assessors. In D. Kahneman, P. Slovic and A. Tversky (Eds.), Judgment under Uncertainty: Heuristics and Biases. Cambridge University Press.
- Lichtenstein, S., Fischhoff, B., and Phillips, L. D. (1982). Calibration of probabilities: the state of the art to 1980. In the same volume.
- Barber, B. M., and Odean, T. (2001). Boys will be boys: gender, overconfidence, and common stock investment. Quarterly Journal of Economics, 116(1), 261-292.
The Calibration Test is an educational tool and not a diagnosis of anything. Ten questions is a small sample, so one result proves little, and a score of eight is well within chance, and even someone whose 90% ranges are exactly right would score seven or fewer about 7% of the time. The pattern across many tests is what the research describes. The factor shown for how much wider your ranges needed to be is a simple calculation from your own answers. The rule suggested is my own practical suggestion, not a research finding. Trading involves risk, and you should only trade with money you can afford to lose.
