Thinking Fast and Slow
It is a book about human mind and different ways how we perceive situations and on what we base our decisions. There are three main concepts presented in the book. First of them is System 1 and System 2 governing your thinking. System 1 is basically an associative network of everything that happened to you over the course of your life where recent events and associated data have higher importance. System 2 represents the thinking as we usually perceive it, as a linear going through events.
Second of the concepts is differences between Econ and Human. Econ is theoretical concept with strong adoration in economy, while Human is actual representation of person as they behave, containing their issues.
Third of the concepts is experiencing self versus remembering self. Experiencing self represents how we feel about current moment, while remembering self represents how we remember the event. Remembering self is stronger with regard to how we think about further action. It doesn’t care about duration of an event, the peaks and the ending are only important pieces of the experience.
- Operates automatically and quickly with little or no effort
- Links a sense of cognitive ease to illusions of truth, pleasant feelings and reduced vigilance.
- Distinguishes the surprising from normal
- Infers and invents causes and intentions
- Neglects ambiguity and suppresses doubt
- Is biased to believe and confirm
- Exaggerate emotional consistency, also known as halo effect.
- Focuses on existing evidence and ignores absent evidence
- Represents by norms and prototypes, doesn’t integrate
- Matches intensity across scales
- Computes more than intended
- Sometimes substitute an easier question for a difficult one (heuristics)
- Is more sensitive to changes than to state.
- Overweights low probabilities
- Shows diminishing sensitivity to quantity
- Responses more strongly to losses than to gains
- Frames decision problems narrowly, independent one from another.
- Predicts rare events from weak evidence
System 1 doesn’t think in the way we usually perceive our thinking. Instead of linear thinking it just produces answer based on the association. In case, when there isn’t ready answer available to present question it readily supply answer to different simpler question. Usually the hard questions is prediction of future, statistics, math and other such like. In this case it can readily provide answers to how much I like this outcome or how much do I like the person in question.
Norms, Surprises and Cautions
It needs some effort on our side to behave different than what is norm. Therefore the default option defines, how most people will behave. It needs strong persuasion to go against it.
We tend to overestimate importance of the surprises. When something behaves differently to what we know, it tends to bring stronger emotions then should be appropriate towards the event.
The law of small numbers
System 1 due to its associative nature tends to overrate probability that something happens even when we know it isn’t really probable. Quite often it actually provides answer to do I know someone to whom such thing happen instead of how probable it really is.
The System 1 permanently all the time builds the current representation of the world. This means that any association you received upfront at least a bit influence what you will think and which associations will come to mind. It is possible to counter this but it needs lots of conscious effort.
Whether we can readily provide an example of thing influences heavily whether we will overestimate or underestimate probability of some act. Also in case of emotions associated with some outcomes, these comes more easily to the mind and therefore we overestimate them.
Econ vs. Human
Less is more
If you have some set of things it is possible to change the perceived value of the set by adding a low value item downwards, even though the value of the whole set actually raised.
Causes trump statistics
If we find some cause of event, which would seem meaningful to us, we tend to ignore statistical frequency of such event and overestimate its possibility.
Regression to mean
We tend to ignore regression to mean. It happens when outcome of some action is influenced heavily by luck. If some outcome was extremely positive we tend to overestimate probability of another such like event, even though the actual probability is actually lower.
Illusion of understanding
Our minds tend to create story from everything we perceive in the world. The less we know, the easier it is to build such story. Therefore we often overestimate our knowledge, because our minds created the coherent, though invalid story.
Illusion of remembering
Unless our mind decides that some information is definitely wrong, it becomes part of our experience and can influence our later decisions.
Illusion of truth
You can help create this illusion if you write important staff in bigger letters or easier to read letters. The less effort the mind must spend, the higher is probability that it will retain the information. Rhyming also supports this.
There exists certain areas, where intuition is actually really good and brings better experiences. Mainly it is in the areas, where the situation are similar and people gets fast feedback and get enough of such experience. One of good examples are firefighters.
We tend to ignore probability of outcome or difficulty od some of our undertaking. When there is lot of uncertainty, it is useful to bring View from outside of the group, for example how long different but similar project take.
If I like something I tend to value things associated with it more highly. If I dislike something, it means that I will associate lower value with it.
In game of chance when presented with a chance to win or loose we tend to be risk averse. But if instead offered serie of the game of chances we tend to be less risk averse which is usually more in line with reality.
There is one interesting caveat and that is when I am in game of chance presented with outcome as preventing loss, I tend to be risk seeking instead of risk averse.
Frames and reality
By correctly framing the question by references to relevant data, you can modify outcomes of the question. What you see is all there is principle is here in play.
Life as a story
We want life to be an interesting story more than we care actually about the perceiving of the life by the person that is actually living the life.
Experienced vs. Remembering self.
Already mentioned discrepancy between well-being at the moment and how we remember it afterwards.