Thinking, Fast and Slow

by Daniel Kahneman

The expectation of intelligent gossip is a powerful motive for serious self-criticism, more powerful than New Year resolutions to improve one’s decision making at work and at home.

We are often confident even when we are wrong, and an objective observer is more likely to detect our errors than we are.

affliction.

heuristic

had even come up with explanations for that “fact,” including the aphrodisiac effect of power and the temptations of life away from home. I eventually realized that the transgressions of politicians are much more likely to be reported than the transgressions of lawyers and doctors. My intuitive impression could be due entirely to journalists’ choices of topics and to my reliance on the availability heuristic.

System 1 operates automatically and quickly, with little or no effort and no sense of voluntary control.

System 2 allocates attention to the effortful mental activities that demand it, including complex computations.

The gorilla study illustrates two important facts about our minds: we can be blind to the obvious, and we are also blind to our blindness.

Even if you think for a living, few of the mental tasks in which you engage in the course of a working day are as demanding as Add-3, or even as demanding as storing six digits for immediate recall.

to place too much faith in their intuitions. They apparently find cognitive effort at least mildly unpleasant and avoid it as much as possible.

ideomotor effect.

The familiarity of one phrase in the statement sufficed to make the whole statement feel familiar, and therefore true.

The initial traits in the list change the very meaning of the traits that appear later. The stubbornness of an intelligent person is seen as likely to be justified and may actually evoke respect, but intelligence in an envious and stubborn person makes him more dangerous.

The sequence in which we observe characteristics of a person is often determined by chance. Sequence matters, however, because the halo effect increases the weight of first impressions, sometimes to the point that subsequent information is mostly wasted.

From the same urn, two very patient marble counters take turns. Jack draws 4 marbles on each trial, Jill draws 7. They both record each time they observe a homogeneous sample—all white or all red. If they go on long enough, Jack will observe such extreme outcomes more often than Jill—by a factor of 8 (the expected percentages are 12.5% and 1.56%). Again, no hammer, no causation, but a mathematical fact: samples of 4 marbles yield extreme results more often than samples of 7 marbles do.

If you consider how much you should pay for a house, you will be influenced by the asking price. The same house will appear more valuable if its listing price is high than if it is low, even if you are determined to resist the influence of this number;

The same bias contributes to the common observation that many members of a collaborative team feel they have done more than their share and also feel that the others are not adequately grateful for their individual contributions.

An inability to be guided by a “healthy fear” of bad consequences is a disastrous flaw.

When experts and the public disagree on their priorities, he says, “Each side must respect the insights and intelligence of the other.”

The Alar tale illustrates a basic limitation in the ability of our mind to deal with small risks: we either ignore them altogether or give them far too much weight—nothing in between.

homunculus

pernicious

Pernicious - having a harmful effext, especially in a subtle way

The California earthquake scenario is more plausible than the North America scenario, although its probability is certainly smaller. As expected, probability judgments were higher for the richer and more detailed scenario, contrary to logic. This is a trap for forecasters and their clients: adding detail to scenarios makes them more persuasive, but less likely to come true.

People who see the dinnerware set that includes broken dishes put a very low price on it; their behavior reflects a rule of intuition. Others who see both sets at once apply the logical rule that more dishes can only add value.

The experiment shows that individuals feel relieved of responsibility when they know that others have heard the same request for help.

You are more likely to learn something by finding surprises in your own behavior than by hearing surprising facts about people in general.

rewards for improved performance work better than punishment of mistakes.

ubiquitous,

precocious

The halo effect helps keep explanatory narratives simple and coherent by exaggerating the consistency of evaluations: good people do only good things and bad people are all bad.

Mentioning the single lucky incident actually makes it easier to underestimate the multitude of ways in which luck affected the outcome.

The human mind does not deal well with nonevents.

Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.

A general limitation of the human mind is its imperfect ability to reconstruct past states of knowledge, or beliefs that have changed. Once you adopt a new view of the world (or of any part of it), you immediately lose much of your ability to recall what you used to believe before your mind changed.

Actions that seemed prudent in foresight can look irresponsibly negligent in hindsight.

In highly efficient markets, however, educated guesses are no more accurate than blind guesses.

our tendency to construct and believe coherent narratives of the past makes it difficult for us to accept the limits of our forecasting ability.

“We reach the point of diminishing marginal predictive returns for knowledge disconcertingly quickly,”

recidivism.

A study of 101 independent auditors who were asked to evaluate the reliability of internal corporate audits revealed a similar degree of inconsistency. A review of 41 separate studies of the reliability of judgments made by auditors, pathologists, psychologists, organizational managers, and other professionals suggests that this level of inconsistency is typical, even when a case is reevaluated within a few minutes. Unreliable judgments cannot be valid predictors of anything.

do not trust anyone—including yourself—to tell you how much you should trust their judgment.

The unrecognized limits of professional skill help explain why experts are often overconfident.

desultory

vicissitudes.

In the competition with the inside view, the outside view doesn’t stand a chance.

mimeographed

The psychological value of a gamble is therefore not the weighted average of its possible dollar outcomes; it is the average of the utilities of these outcomes, each weighted by its probability.

The poorer man will happily pay a premium to transfer the risk to the richer one, which is what insurance is about.

Outcomes that are better than the reference points are gains. Below the reference point they are losses.

labile,