Illusion of validity is a cognitive bias where individuals overestimate their ability to predict and interpret outcomes based on a consistent pattern or narrative within a set of data. This bias persists even when the person understands the limitations of the data and the prediction method, leading to an unwarranted confidence in their judgments and forecasts.
Daniel Kahneman, after evaluating military candidates, found that despite their strong initial judgments about leadership potential, their predictions about future performance were largely ineffective, revealing the illusion of validity in their confident assessments.
To overcome the illusion of validity, one should seek diverse and independent sources of data, remain aware of the limitations of available information, and engage in critical thinking rather than solely relying on intuitive judgments based on recognizable patterns.