Prompt · Cognitive tools
Inside View and Outside View
The same question, put to the board in two framings. Where the answers diverge, the gap is the information.
When to use it
When the board must form a judgement about a proposition
whose truth value depends on both the specific facts of the
case and the base-rate behaviour of comparable cases. Legal
exposure, regulatory outcome, market response, executive
performance, project success — each of these sits on two
axes. The inside view reasons from the specific details; the
outside view reasons from the reference class. Kahneman’s
observation (Kahneman & Tversky, 1979; Kahneman, 2011)
is that boards instinctively form inside-view judgements and
rarely construct the outside view unless prompted — and that
inside-view judgements are systematically over-confident
because they omit the base-rate evidence that the outside
view supplies. This prompt forces both views to be put side
by side and the gap between them read as data.
The prompt
You are serving as a senior board advisor conducting an inside-view / outside-view analysis on a question the board must decide.
The question is:
[STATE THE QUESTION NEUTRALLY. Examples: “Will the regulatory investigation settle within twelve months?” / “Will this acquisition achieve the projected synergies?” / “Will this executive succeed in the CEO role?” / “Will this litigation settle within our authorised range?”. Include the board’s intuitive current answer if management has given one.]
The specific context is:
[DESCRIBE THE SPECIFIC FEATURES OF THIS CASE. Redacted. 4-6 sentences. Include what is distinctive about this situation — the facts, personalities, pressures, timelines that make the board’s inside-view assessment what it is.]
Do the following:
1. INSIDE VIEW: Starting from the specific features above, construct the strongest inside-view answer to the question. Reason from the case itself — the actors, their intentions, the specific evidentiary posture, the company’s particular strengths and weaknesses in this matter. Produce a best estimate and a range, with the reasoning made explicit.
2. OUTSIDE VIEW: Now construct the outside-view answer. Define the reference class — the broader category of cases of which this one is an instance. State the base-rate outcome distribution for that class. Locate this case on the distribution without special pleading for its specific features. Produce a best estimate and a range based purely on the reference-class distribution.
3. Compare the two views. If they align, state why the specific features do not require departure from the base rate. If they diverge, state the divergence precisely — how much, in which direction, on what grounds. Identify which specific features of the case would need to be true to justify the inside-view departure from the outside view.
4. Identify the evidence the board does not yet have that would resolve the divergence. Be specific — not “more information on X” but “the answer to the following three questions: ...”.
5. Finally: name the single most important cognitive bias that the inside-view answer may be exhibiting, and the single most important way the outside view might be missing something specific-features relevant.
Be specific and concrete. Do not hedge with “it depends.” Avoid generic governance language. The purpose of the exercise is to force intellectual honesty about the gap between what we think about this case and what has actually happened to cases like this.
What to supply
Redacted facts, at the level of structural detail. The inside
view becomes valuable when the board’s specific knowledge of
the case is given weight; the outside view becomes valuable
when the reference class is defined with some precision.
Both fail when the facts are too thin or too bland to
anchor specific reasoning.
How to use the output
The useful artefact is the gap between the two views. Where
they align, the board’s instinct is well-calibrated and the
exercise has quietly built confidence. Where they diverge
materially, the board should not treat the outside view as
the “right answer” but should treat the divergence as a
signal — either the case has features that genuinely warrant
the inside-view optimism (or pessimism), in which case the
board should articulate those features concretely, or the
inside view is exhibiting motivated reasoning about the
specific case, in which case the outside view is acting as
a corrective.
Related
◊