Cloudonomics: The Business Value of Cloud Computing, + Website

Behavioral Cloudonomics of Forecasting

Forecasting in the broadest sense—our ability to imagine the future, evaluate potential scenarios, assess the impact of our actions without executing them—is perhaps one of the capabilities that makes us most human. As part of a so-called executive function of the brain, it has roots in the prefrontal cortex and the anterior cingulate cortex. These areas are involved in “cross-temporal perception-action cycles,” that is, mingling past experience with future planning.

A slew of cognitive biases impact forecasting. We devote Chapter 23 to a survey of those impacting cloud computing, but ones relevant to forecasting include a bias for certainty; the clustering illusion, where randomness—such as stars—appears to have a pattern—such as a constellation; selective recall and the confirmation bias (i.e., a preference for proving that we were right); and illusory control, the belief that we can control inherently random outcomes.

Pattern Detection

The brain encodes information for efficiency, predicts trends, becomes stimulated when those predictions are not met, and then attempts to work the new exceptions into its predictive model of reality. Learning is intimately associated with the neurotransmitter dopamine and the structure and dynamics of those neurons that leverage this chemical communications system. As bestselling author Jonah Lehrer explained, “If everything goes according to plan . . . dopamine neurons secrete a little burst of enjoyment. ...