Occurs when you ignore the distribution around a correct average. For example, putting all eggs in one basket versus multiple baskets results in the same average number of eggs saved, but the risk of losing everything is much higher in the single-basket scenario.
Occurs when the average state of a system is not the state of the system at the average. This is mathematically known as Jensen’s Inequality . Classic Examples of the Flaw of Averages the flaw of averages pdf download
The is a fundamental statistical fallacy—originally coined by Dr. Sam Savage—stating that plans based on average assumptions are, on average, wrong . When decision-makers substitute a single average number for an uncertain future value, they systematically underestimate risk and overestimate potential success. Key Concepts and Definitions Occurs when you ignore the distribution around a