Thinking, Fast and Slow by Kahneman
‘Thinking,
........Read moreWhat is the distinction between System 1 and System 2? – Chapter 1
When looking at a picture of a blonde woman with an angry expression on her face, you immediately notice her having blonde hair and being angry. You get the feeling she is about to say something negative in a loud
........Read moreSystem 2 is defined by its effortful operations, although it is also lazy: it puts in no more effort than needed. Some crucial tasks can only be performed by System 2, because they require self-control and effort to overcome the impulses
........Read moreSystem 2 has a natural pace. Having random thoughts and monitoring what happens around you is not effortful. We make small decisions when we ride our bicycle, take in some information as we watch the news and have low key conversations with our colleagues or partner. These actions take little effort and can be compared to a
........Read moreRead the following words:
“Mango” “Puke”
In a few seconds you will experience appalling images and pull a disgusted face. You automatically responded to the word ‘puke’ like you would respond to the actual event. Our minds automatically assume causality
........Read moreWhen we are conscious, several assessments take place in our brain, providing answers to important questions: Is something new happening? Are things going alright? Is there a threat? Should I redirect my attention? System 1 carries out these assessments automatically. It determines whether System 2 needs to put in more effort. ‘Cognitive ease’ is one of the
........Read moreThe main function of System 1 is maintaining and updating a model of your personal world, which represents normality. This model is constructed by associations that connect ideas of events, circumstances, outcomes and actions that regularly occur. The formed connections become a pattern of associated ideas, which represents the structure of events in your life. It determines
........Read moreOne of the characteristics of System 1 is jumping to conclusions. Jumping to a conclusion is efficient if the conclusion is likely to be true, the costs of a potential mistake are acceptable and it saves a fair amount of effort and time. It is risky when the stakes are high, the situation is unfamiliar and there
........Read moreSystem 2 deals with both questions from someone else (“Did you like the food?”) and from your own mind (“Do I really need to buy this?”). Both answers come from directing your attention and searching your memory. That is not how System 1 operates. It constantly monitors what is happening inside and outside our mind. It unintentionally
........Read moreOur minds have intuitive opinions and feelings about nearly everything, only in rare cases we face problems to which no solution comes spontaneously to mind. We dislike or fancy someone before we know much about him/her and we distrust a stranger without knowing why. We have answers to questions we don’t fully understand, based on evidence we
........Read moreA study of cancer diagnoses in the United States showed a pattern: the number was lowest in sparsely populated, rural and Republican areas. What you make of this information, through searching memory and formulating hypotheses, is an operation of System 2. System 1 was also involved: System 2 depends on the suggestions and facts retrieved from associative
........Read moreThe ‘anchoring effect’ is the phenomenon that occurs when you consider a particular value for an unknown quantity, prior to estimating that quantity. Imagine you are asked to spin a wheel marked 0-100, write the number you got down and then have to answer the question “What do you think is the percentage of…?” Your estimated answer
........Read moreWhat do people do when they want to estimate the frequency of certain categories (for example the divorce rate among professors, poisonous snakes)? The reliance on the ease of memory search (instances coming to mind) is called the ‘availability heuristic’. This heuristic is both an automatic operation (System 1) as a deliberate problem-solving strategy (System 2).
........Read moreEconomist Kunreuther found that availability effects are helpful in explaining the pattern of insurance purchase and prevention following disasters. Victims are worried after a disaster making them more eager to purchase insurance and adopt measures of prevention. This is temporary: once the memories start to fade, so does the worry. The recurrent cycles of disaster, worry and
........Read moreImagine drawing one ball from a jar. To determine whether the ball is more likely to be black or yellow, you need to know how many balls of each color there are in the jar. The proportion of balls of a specific color is called a ‘base rate’.
If you have to guess the
........Read moreA famous and controversial experiment is known as the ‘Linda problem’. It was made up by Amos and Kahneman to demonstrate the role of heuristics in judgment and their incompatibility with logic. People who read the description of Linda instantly knew what University she had attended, because it was known for its politically engaged, radical students. Participants
........Read moreRead the following problem, what is your intuitive answer?
“Last night, a bus was involved in a traffic accident. Two bus companies, the Yellow and the Brown, operate in the area. 80% of the busses are Yellow and 20% are Brown. A witness declared the bus being Brown. The reliability of the witness in similar
........Read moreA key principle of skill training is that rewarding improvement works better than punishing mistakes. An experienced instructor doubted this, he stated that his students performed worse after receiving a compliment and did better after being shouted at. He was right and wrong. A praised performance is likely to be followed by a poor performance and punishment
........Read moreForecasting is a major part of our professional and private lives. A number of predictive judgments are based on analyses or computations, but most involve System 1 and intuition. Some intuitions draw on expertise and skill, gained through experience. The automatic and quick judgments and decisions of physicians, chess masters and fire chiefs are examples of skilled
........Read moreThe concept of a ‘narrative fallacy’ was introduced by Nassim Taleb and describes how flawed stories of the past influence our current views and future expectations. An explanation is considered more appealing if it’s concrete, assigns a significant role to talent, intentions or ignorance (instead of luck) and focuses on a few conspicuous events that happened than
........Read moreSystem 1 is known for jumping to conclusions from limited evidence (WYSIATI). The coherence of the story created by System 1 and System 2 makes us confident about our opinions. The quality and amount of the evidence are less important, because poor evidence created a good story. We even have beliefs without any evidence for them, we
........Read morePsychologist Meehl reviewed the results of studies that had assessed whether ‘clinical predictions’ based on the subjective impressions of trained professionals were more accurate than ‘statistical predictions’ made by combining ratings or scores according to a rule. In one study, trained counselors were asked to predict the grades of students at the end of their first school
........Read moreGary Klein is the intellectual leader of students of Naturalistic Decision Making (NDM), who study real people in natural situations. He rejects the focus on biases in heuristics, doing artificial experiments and is highly skeptical about choosing algorithms over human judgments. Klein is known for studies of expertise in firefighters and the development of intuitive skills in
........Read moreKahneman was asked to write a textbook about decision making and judgments. After one year, a number of chapters and the syllabus had been written, which was considered good progress. Kahneman asked his team to separately estimate how long it would take to finish
........Read moreThe planning fallacy is one of many manifestations of the optimistic bias. Many people view their attributes as more favorable than they probably are and consider their goals as more achievable than they probably are. Optimistic bias can be a risk as well as a blessing, which is why you should be cautious when you feel optimistic.
........Read moreEconomics and psychologist have very different views of people. The first think of them as rational and selfish beings. The latter argue that people are neither completely rational nor selfish. Kahneman and Amos studied the attitudes of people to risky options in order the answer the question “What rules govern choices between different simple gambles and between
........Read moreIn utility theory, the utility of a gain is determined by comparing the utilities of two states of wealth. The utility of receiving an extra € 400 when your wealth is € 2 million is the difference between the utility of € 2.000.400 and the utility of
........Read moreImagine looking at a graph displaying someone’s ‘indifference map’ for two goods: income and vacation days. This map specifies particular combinations. Each curve connects the combinations of the goods that are equally desirable: they have the same utility. The convex shape suggests diminishing marginal utility: the more vacation days you have, the less you care for one more, and
........Read moreIn an experiment, people lying in a brain scanner were shown several images. Among them were pictures of the eyes of a happy person and of a terrified person. They were shown for a fraction a second: the participants never consciously knew they had seen the pictures. One part of their brain did know: the amygdala, the
........Read moreWhen we evaluate complex objects (mother-in-law, gadgets), we assign weights to their characteristics: some have a bigger influence than others, which we might not be aware of. When we evaluate an uncertain situation, we assign weights to the possible outcomes. These weights are correlated with the probabilities of the outcomes: a 40% chance of winning the jackpot
........Read moreTry remembering a time in which terrorist attacks in public transport were relatively common. The attacks were fairly rare in absolute numbers and the risks for travellers very small, but that is not how they felt about it. People tried to avoid public transport or were very cautious. Kahneman also disliked being near buses, even though he
........Read moreThe emotional evaluation of ‘sure loss’ and ‘sure gain’ is an automatic response of System 1, which takes place before the computation of the expected values of the gambles. People that have to make choices that involve high or moderate probabilities tend to be risk seeking when it
........Read moreFor most people, gaining money reflects achievement and self-regard. We keep score in our mind when we lose or gain money and consider them punishments and rewards, threats and promises. The ‘scores’ motivate our actions and influence our preferences. Cutting our losses feels like a failure, so we refuse doing it.
We hold money
........Read moreConsider the following task. “A woman lost the use of her left leg as a result of a stabbing. She was stabbed during a robbery in a grocery store in her neighborhood. There are two grocery stores near the woman’s home, one of which she is a regular customer. Two scenario’s:
A. The robbery
........Read moreFrance and Argentina competed in the 2022 World Cup final. The following sentences both describe the outcome: “Argentina won.” “France lost.” Whether these statements have the same meaning or not depends on your idea of ‘meaning’.
The truth conditions of the two interchangeable descriptions are identical: one is true, so the other is true
........Read moreThe notion ‘utility’ has two different meanings. Jeremy Bentham argued that people are under the governance of two masters: pleasure and pain. They determine what we shall do and what we ought to do. Kahneman refers to this idea as ‘experienced utility’. When economists use the term, they mean ‘wantability’, which Kahneman refers to as ‘decision utility’.
........Read moreWhen people are about to die, their loved ones rush to them for one last moment, before death sets in. Why do we care so much about that final moment? Why is it so important that a movie ends with people arriving in time, while the length of the life was not taken in consideration? It hardly
........Read moreResearch about well-being revolves around one survey question, which was considered a measure of happiness and was addressed to the remembering self: “All things considered, how satisfied are you with your life as a whole these days?” In his experiments, Kahneman found that the remembering self was not the best witness, so he decided to focus on
........Read moreThe decision to marry someone reflects a huge error of ‘affection forecasting’. On their big day, the groom and bride know that the divorce rate is high, but they believe that these numbers do not apply to them.
A study on the level of life satisfaction from the day people get married shows a
........Read more
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