Patrick Brown
Patrick Brown asked:

What are the three most vital takeaways from this book and why are they so important?

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Steve Your mind has two different systems. One works quickly and intuitively, and is often wrong. The other is analytic, and can get the right answer, but is very lazy and loves to take shortcuts, and hand things back off to the quick system.

This book details LOTS of fallacies and traps that these two different systems, working against each other sometimes, can even cause professional statisticians to react incorrectly to a situtation.

This book gives you 3 or 4 statements at the end of every chapter to help to realize the ways you could apply this knowledge you have learned like "When we survey the reaction to these products, let's make sure we don't focus exclusively on the average. We should consider the entire range of normal reactions."

This is not a typical "business" book that leds itself to the "top 3" synopsis. The dedicated student will be rewarded by reading the whole thing.
Yulia Vorotyntseva 1. In fostering learning, rewards work better than punishments, but due to the regression to the mean, we have an illusion of the reverse effect. -- very important for me, since I have to deal with teaching.

2. Risk-aversion (and loss aversion) leads to bad decision-making, and you should get rid of it (I realized it before, when found that just by switching to high-deductible policy and and making a health savings account instead, I can save a lot of money without any threat to my health)

3. The importance of metrics: to avoid framing effect, it is good to have some fixed metric in mind (say, in a year on average it will make me X bucks poorer/richer), and transfer the input parameters into this system when making a decision.
Slaim96 IMO there are more than three things.
From memory:
1- The halo effect
2- Priming effect
3- Sunk cost Fallacy
4- Anchoring effect

This book is so amazing and is a definite re-read for me
Cindy We each have accumulated our own personal, intuitive brain that functions all the time and tends to guide most of our actions and decisions. But our intuitive brain (system 1) is highly prone to a variety of biases and flaws.

Our more logical brain (system 2) seldom activates at all, and will even activate less frequently if we become tired (after too much logical brain effort). Without it's more cautious, devil's advocate analysis, we often make silly mistakes or even serious errors of judgement.

Trying to overcome our intuitive brain's flow (e.g. to overcome our natural bias), leaves us feeling uncomfortable and uncertain - even years after such an experience. We feel more certain and more at ease if we just go with our intuitive flow. But our intuitive brain is very flawed, so when we give it free reign we often do a lot more harm (especially to others we may have judged unfairly due to our bias).

The book implies there is no simple answer to this inherent flaw in our thinking. I'm guessing the fact that our intuitive brain can learn and acquire skill/expertise means there are ways to overcome at least some of the flaws. But it takes a great deal of effort, and, as the book points out, there may be some situations where it is much better to rely on computations/algorithms devised based on scientific evidence rather than attempt to overcome our flawed intuitive thinking.
Tom Gosh, where to start? Here are some from memory, most without the proper terminology from the book.

1) Just how much System #1 affects our thinking and decisions, without our knowledge, without our asking it to, without us wanting it to. We need to deal with the fact that a random number spun before answering a question *will* affect our answer to that question, no matter how stupid that seems. Understanding system #1, and training system #2 to be on its guard, is the most important takeaway.

2) How much loss aversion, and its opposite, desire of certainty, affect our decisions. I am not that sure its a bad thing - I know I will pay a premium for certainty, but it it worth it. Tying it to regret and blame is useful info.

3) Our tendency to overestimate the reliability of our decisions because we do not regress to the mean. Our thoughts and decisions may be in the right direction, but we will be overconfident in them unless we think "slow" on them.

4) Along the same lines, certain things - financial predictions, political pundits, lots of other things - are incapable of accurate prediction, by their nature (too much is unknown or hasn't happened yet). That may be obvious to some; what is most useful is realizing the true danger is the false *confidence of the predictors*.

5) And maybe just because I read this part recently: the differences between single decisions and linked decisions: how we can end up changing our mind on a decision once we made it, and how a gamble may be undesirable once, but desirable if repeated multiple times.

There are many, many more. Read it, then make the decision to read it again.
Victor Parkkila I've written a summary of the book here:https://iareads.wordpress.com/2018/02...
Kathryn Atkins 1.) By questioning how we make decisions and how we think about seemingly ordinary things, this book changes the very underpinnings of the approach to my days and how I view the world. I'm grappling with regression to the mean at the moment, and am having trouble wrapping my head around the concept. I do not think I am alone in this. 2.) I am definitely a System 2 person. I am married to a System 1 person. It would be interesting to see how often that happens!
3.) If you want a "makes-your-hair-hurt" tome as it pushes the neural synapses, this is the book for you. It is not an easy book. As I view our newsfeeds, I wonder if "they" know our weaknesses in thinking. For we are lazier than I thought before reading this book.
Michael Perkins the book is chock full of practical wisdom based on sophisticated research. I have read it three times. This NYT Magazine article gives a nice sample of what to expect...

http://www.nytimes.com/2011/10/23/mag...
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