Efficacy of bias awareness in debiasing oil and gas judgments

Abstract

It is argued that biases such as anchoring and overconfidence contribute to a US$30 billion/year loss in the oil and gas industry (Goode, 2002). The most commonly used debiasing technique, within the industry, is awareness-style training, where participants have the biases and debiasing techniques described to them without specific training. Given such training is delivered by consultants, however, there is little available evidence of its efficacy and concern regarding a lack of up to date debiasing methods. We present a study designed to measure the benefit of such awareness-style training for the well-known anchoring and overconfidence biases, using a sample of petroleum engineering students. Results indicate that course attendance reduced participants’ overconfidence - calibration improving by 21% - but no benefit was observed for anchoring. It is argued that this difference results from the debiasing technique for anchoring requiring a greater degree of domain knowledge than the students possessed. A detailed analysis of the relationship between accuracy in, and susceptibility to, the anchoring question supported this – indicating that participants who simply relied on the anchor actually performed better than those who hazarded their own guesses. Potential benefits of debiasing and, specifically, the incorporation of up to date debiasing techniques, are discussed along with the need for further research.