Objective Models > Human Experts

Leaving investing decisions to systematic models is a way to overcome our behavioral biases. A study conducted in 2000 compared the decision making abilities of simple models against human experts. Some example scenarios included doctors estimating a medical diagnosis, university professors guessing which applicants would be admitted, and CEOs placing a probability of a business failing.

In each scenario a human expert (doctor, professor, CEO) and their forecast was compared to the forecasting output of simple model that took in pure data about the patient/student/business. Among 136 different scenarios, the overwhelming evidence shows that simple models consistently outperform the forecasting ability of human experts.3