What’s worse, “we are often confident even when we are wrong,” writes Daniel Kahneman, in his masterful new book on psychology and economics called “Thinking, Fast and Slow.”

An objective observer, he writes, “is more likely to detect our errors than we are.”

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Now, five months into the job, Williams is finding a voice of his own, separate from Digg founder Kevin Rose’s, and trying it out on the Digg community; the longtime veteran of Amazon recently participated in a well-received Digg Dialogg video interview, posted on Tuesday, to answer user questions. (It’s viewable here).

“There was a launch that was in violent disagreement with what our community expected out of the Web site,” Williams told Leo Laporte, who facilitated the interview based on Digg users’ questions. “It’s truly a tragedy of the ages, to some extent.”

But Digg is still a “very vibrant Web site,” with close to 20 million monthly unique visitors, Williams said, and the opportunity to hone a focus on social news that other companies may not have.

(Plus, despite layoffs, a perceived lack of relevancy relative to other social start-ups and multiple leadership changes, Digg still has plenty of money in the bank.)

“It is our top priority to rejuvenate the community,” Williams said.

Digg’s latest launch, called V4, was seen by many as a move to devalue the site’s homegrown community. V4 was the most significant in a string of product changes that took power away from the small body of users that set the agenda for the news site and gave a stronger voice to publishers and Digg’s own curators. And V4 was also an overdue, complete technology overhaul that left out many much-loved features.

In the Laporte interview, Williams quickly tackled precise details about previous features the Digg community wants reinstalled, noting, for instance, that the site has already brought back the “bury” button, allowing users to counteract other users’ votes on submitted stories. He said Digg is also planning future features such as a honing of its news-ranking algorithms for slower weekend traffic, when less-worthy stories may make it to the top.

Beyond those tweaks, Digg will make large-scale efforts to become more personalized, said Williams, and to create communities around specific topics. That’s not necessarily something that the old-time crowd will love, but it may make the site more useful for a broader audience.

Williams encouraged users not just to visit the site, but to comment on and vote up stories with Diggs; those participatory behaviors have decreased as a portion of overall traffic since the launch of V4, he said.

Being the voice of Digg is no small task, and it’s not just because of the company’s hypercritical user base. Digg has long been associated with the founding presence of TV and online video host Kevin Rose. And until Williams joined, Rose had been interim CEO after longtime leader Jay Adelson was pushed out of the company in April. Now Rose is occupied with his many angel investments, a new video show and a newsletter called “Foundation.”

Digg users were uncharacteristically positive in the comments section of the Williams interview entry. (The friendly tone makes me wonder if the old crowd has indeed high-tailed it somewhere else!) “Digg is in good hands,” said one. “I must say that Digg is doing a fantastic job listening to the community and implementing new features,” said another. One user even acknowledged, “I realize changes take time to implement.”

CEO Tim Armstrong tells The Wall Street Journal about plans he has previously hinted about–“a new digital-newsroom system that uses a series of algorithms to predict the types of stories, videos and photos that will be most popular with consumers and marketers.”

The idea is that even a brain-dead editor knows that people want to read about Tiger Woods–and AOL’s coverage includes a 500-slide (!) slide show. But there are plenty of other stories that will go unassigned without a computer’s help. For example:

AOL says its new system determined that the most popular topic on the Web last Tuesday was “crib recalls,” following news of a massive recall by Stork Craft Manufacturing of Canada. AOL had only one story on its sites on the recall. But, if the new system had been live, editors would have geared up to supply stories on the subject from a number of angles, the company says.

This is the flip side to AOL’s hiring binge of the past year, where it scooped up a small army of veteran writers and editors. And it has a certain logic to it. Why wouldn’t a publisher want to publish things that readers want to read and advertisers want to sponsor?

Of course, this also creeps the heck out of people with traditional notions of journalism, or even “content production.” Including some of those recent hires. The company has been trying to soothe employees’ fears, but given that AOL is letting lots of people go, you’re not going to hear many writers and editors carping about this openly.

Investors who are going to own AOL after it spins off from Time Warner (TWX) next month are supposed to be cheered by the plan. It has a hint of Google (GOOG) to it, which makes sense given Armstrong’s long tenure there. And it sounds very similar to Demand Media, the much buzzed about content-creation factory.

AOL’s plan also sounds very similar to Associated Content, a search-driven content mill run by Armstrong’s former co-worker, Patrick Keane. Armstrong also happens to be an investor in the site, which raised a $6 million B round last spring that valued the company at $43 million. And earlier this year, AOL explored a purchase, sources say.

But while Armstrong ended up buying Patch Media, another start-up where he was an investor, he never pulled the trigger on Associated Content. Question: Does his new platform make a future deal more or less likely?

That’s the conclusion Pali Research analyst Richard Greenfield reached in a research piece today on News Corp. “While everyone is blaming social networking as the culprit for Google’s MySpace monetization problems, the real problem is Google itself and its search algorithms for social networking,” he asserts.

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