Business

This fuzzy logic becomes most pronounced when humans deal with finances particularly investments. Kahneman covers the research that says as investors we are programmed to buy high when a stock is "on a roll" often leading us to overpay and catch a stock at its apex. Research also shows that we hang on to our mistakes because it is too emotional intense to admit the failure. A slew of books cover this same area such as The Undercover Economist. Again though not to the depth and academic rigor that Kahneman brings to bear.

Decision-making also seems to be a particular sore spot if the research is to be believed. Kahneman reviews the literature and arrives pretty much at the same conclusion as Malcolm Gladwell in his also more accessible Blink. Perhaps the most entertaining part of the book are Kahneman's example questions that demonstrate intuition gone wrong (a bat and a ball cost $1.10 together and the bat is $1 more than the ball, how much is the ball?). The reader gets the answer wrong and the research shows that these simple laboratory tests are played out every day writ large resulting in innocents being sent to jail, mergers destined to flop being green-lighted, bad hires and other serious consequences of "gut feelings".

Kahneman's style is pure academic. He mentions that "System 1" and "System 2" -his names for 2 types of neural processing - are more difficult to remember than more descriptive names (id, ego and superego for example) but he has an academic rationale for employing these. As fitting the professorial style, he name-checks colleagues and top academic institutions constantly and fully lays out his curriculum vitae. If yours include a Nobel Prize, you would shut up about your resume either. However, what you lose in ease of reading versus more mainstream treatises on these subjects you gain in rigor and in comprehensiveness. Thinking, Fast and Slow replaces a bookshelf of other books if you are up to the intellectual challenge.

In short, well worth your time and effort.