Monday, December 6, 2010

Trading on the Titanic Effect

Via The Psy-Fi Blog (H/T Phil's Favorites).
The Titanic Effect can occur at many levels, but the most dangerous thing about it is that the more you believe something can’t go wrong the worse the eventual disaster is. As Nancy Leveson has explained, the reasoning behind the idea that the Titanic wasn't stupid, just inadequate:
"Certain assumptions were made in the analysis that did not hold in practice. For example, the ship was built to stay afloat if four or less of the sixteen water-tight compartments (spaces below the waterline) were flooded. Previously, there had never been an incident where more than four compartments of a ship were damaged so this assumption was considered reasonable. Unfortunately, the iceberg ruptured five spaces.

It can be argued that the assumptions were the best possible given the state of knowledge at that time. The mistake was in placing too much faith in the assumptions and the models and not taking measures in case they were incorrect (like the added cost of putting on-board an adequate number of lifeboats)".
This type of self-confident belief in their own creations is the type of thing that leads software designers to remove redundant checks from their systems because “they can never happen”. After all, what’s the point in having belts and braces? Whadda yuh mean, I wasn’t supposed to go on a diet …?
Click Here to Read: Trading on the Titanic Effect 

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