Thinking, Fast and Slow
Thinking, Fast and Slow
Summary
Two systems
In the book's first section, Kahneman describes two different ways the brain forms thoughts:
Kahneman uses heuristics to assert that System 1 thinking involves associating new information with
existing patterns, or thoughts, rather than creating new patterns for each new experience. For example, a
child who has only seen shapes with straight edges would experience an octagon rather than a triangle
when first viewing a circle. In a legal metaphor, a judge limited to heuristic thinking would only be able
to think of similar historical cases when presented with a new dispute, rather than seeing the unique
aspects of that case. In addition to offering an explanation for the statistical problem, the theory also
offers an explanation for human biases.
Anchoring
The "anchoring effect" names our tendency to be influenced by irrelevant numbers. Shown higher/lower
numbers, experimental subjects gave higher/lower responses.[3]
This is an important concept to have in mind when navigating a negotiation or considering a price. As an
example, most people, when asked whether Gandhi was more than 114 years old when he died, will
provide a much larger estimate of his age at death than others who were asked whether Gandhi was more
or less than 35 years old. Experiments show that our behavior is influenced, much more than we know or
want, by the environment of the moment.
Availability
The availability heuristic is a mental shortcut that occurs when people make judgments about the
probability of events on the basis of how easy it is to think of examples. The availability heuristic
operates on the notion that, "if you can think of it, it must be important." The availability of
consequences associated with an action is positively related to perceptions of the magnitude of the
consequences of that action. In other words, the easier it is to recall the consequences of something, the
greater we perceive these consequences to be. Sometimes, this heuristic is beneficial, but the frequencies
at which events come to mind are usually not accurate reflections of the probabilities of such events in
real life.[7][8]
Substitution
System 1 is prone to substituting a simpler question for a difficult one. In what Kahneman calls their
"best-known and most controversial" experiment, "the Linda problem," subjects were told about an
imaginary Linda, young, single, outspoken, and very bright, who, as a student, was deeply concerned
with discrimination and social justice. They asked whether it was more probable that Linda is a bank
teller or that she is a bank teller and an active feminist. The overwhelming response was that "feminist
bank teller" was more likely than "bank teller," violating the laws of probability. (Every feminist bank
teller is a bank teller.) In this case System 1 substituted the easier question, "Is Linda a feminist?",
dropping the occupation qualifier. An alternative view is that the subjects added an unstated cultural
implicature to the effect that the other answer implied an exclusive or (xor), that Linda was not a
feminist.[3]
A natural experiment reveals the prevalence of one kind of unwarranted optimism. The planning fallacy
is the tendency to overestimate benefits and underestimate costs, impelling people to take on risky
projects. In 2002, American kitchen remodeling was expected on average to cost $18,658, but actually
cost $38,769.[3]
To explain overconfidence, Kahneman introduces the concept he labels What You See Is All There Is
(WYSIATI). This theory states that when the mind makes decisions, it deals primarily with Known
Knowns, phenomena it has already observed. It rarely considers Known Unknowns, phenomena that it
knows to be relevant but about which it has no information. Finally it appears oblivious to the possibility
of Unknown Unknowns, unknown phenomena of unknown relevance.
He explains that humans fail to take into account complexity and that their understanding of the world
consists of a small and necessarily un-representative set of observations. Furthermore, the mind generally
does not account for the role of chance and therefore falsely assumes that a future event will mirror a past
event.
Framing
Framing is the context in which choices are presented. Experiment: subjects were asked whether they
would opt for surgery if the "survival" rate is 90 percent, while others were told that the mortality rate is
10 percent. The first framing increased acceptance, even though the situation was no different.[9]
Sunk-cost
Rather than consider the odds that an incremental investment would produce a positive return, people
tend to "throw good money after bad" and continue investing in projects with poor prospects that have
already consumed significant resources. In part this is to avoid feelings of regret.[9]
Overconfidence
This section of the book is dedicated to the undue confidence in what the mind believes it knows. It
suggests that people often overestimate how much they understand about the world and underestimate
the role of chance in particular. This is related to the excessive certainty of hindsight, when an event
appears to be understood after it has occurred or developed. Kahneman's views on overconfidence are
influenced by Nassim Nicholas Taleb.[10]
Choices
In this section Kahneman returns to economics and expands his seminal work on Prospect Theory. He
discusses the tendency for problems to be addressed in isolation and how, when other reference points are
considered, the choice of that reference point (called a frame) has a disproportionate impact on the
outcome. This section also offers advice on how some of the shortcomings of System 1 thinking can be
avoided.
Prospect Theory
Kahneman developed prospect theory, the basis for his Nobel prize, to account for experimental errors he
noticed in Daniel Bernoulli's traditional utility theory.[11] According to Kahneman, Utility Theory makes
logical assumptions of economic rationality that do not reflect people's actual choices, and does not take
into account cognitive biases.
One example is that people are loss-averse: they are more likely to act to avert a loss than to achieve a
gain. Another example is that the value people place on a change in probability (e.g., of winning
something) depends on the reference point: people appear to place greater value on a change from 0% to
10% (going from impossibility to possibility) than from, say, 45% to 55%, and they place the greatest
value of all on a change from 90% to 100% (going from possibility to certainty). This occurs despite the
fact that under traditional utility theory all three changes give the same increase in utility. Consistent with
loss-aversion, the order of the first and third of those is reversed when the event is presented as losing
rather than winning something: there, the greatest value is placed on eliminating the probability of a loss
to 0.
After the book's publication, the Journal of Economic Literature published a thorough discussion of its
take on prospect theory,[12] as well as an analysis of the four fundamental factors that it rests on.[13]
Two Selves
The fifth part of the book describes recent evidence which introduces a distinction between two selves,
the 'experiencing self' and 'remembering self'.
Two Selves
Kahneman proposed an alternative measure that assessed pleasure or pain sampled from moment to
moment, and then summed over time. Kahneman called this "experienced" well-being and attached it to a
separate "self." He distinguished this from the "remembered" well-being that the polls had attempted to
measure. He found that these two measures of happiness diverged.
Life as a Story
The author's significant discovery was that the remembering self does not care about the duration of a
pleasant or unpleasant experience. Instead, it retrospectively rates an experience by the peak (or valley)
of the experience, and by the way it ends. The remembering self dominated the patient's ultimate
conclusion.
"Odd as it may seem," Kahneman writes, "I am my remembering self, and the experiencing
self, who does my living, is like a stranger to me."[4]
Experienced Well-Being
Kahneman first took up the study of well-being in the 1990s. At the time most happiness research relied
on polls about life satisfaction. Having arrived at the subject from previously studying unreliable
memories, the author was doubtful of the question of life satisfaction as a good indicator of happiness.
He designed a question that focused instead on the well-being of the experiencing self. The author
proposed that "Helen was happy in the month of March" if she spent most of her time engaged in
activities that she would rather continue than stop, little time in situations that she wished to escape, and
not too much time in a neutral state that wouldn't prefer continuing or stopping the activity either way.
Reception
As of 2012 the book had sold over one million copies.[19] On the year of its publication, it was on the
New York Times Bestseller List.[1] The book was reviewed in media including the Huffington Post,[20]
The Guardian,[21] The New York Times,[3] The Financial Times,[22] The Independent,[23] Bloomberg[9]
and The New York Review of Books.[24]
The book was widely reviewed in specialist journals, including the Journal of Economic Literature,[12]
American Journal of Education,[25] The American Journal of Psychology,[26] Planning Theory,[27] The
American Economist,[28] The Journal of Risk and Insurance,[29] The Michigan Law Review,[30]
American Scientist,[31] Contemporary Sociology,[32] Science,[33] Contexts,[34] The Wilson Quarterly,[35]
Technical Communication,[36] The University of Toronto Law Journal,[37] A Review of General
Semantics[38] and Scientific American Mind.[39]
The book was also reviewed in an annual magazine by The Association of Psychological Science.[40]
Replication crisis
Part of the book has been swept up in the replication crisis facing psychology and the social sciences. An
analysis[41] of the studies cited in chapter 4, "The Associative Machine", found that their R-Index[42] is
14, indicating essentially no reliability. Kahneman himself responded to the study in blog comments and
acknowledged the chapter's shortcomings: "I placed too much faith in underpowered studies."[43] Others
have noted the irony in the fact that Kahneman made a mistake in judgment similar to the ones he
studied.[44]
See also
Behavioral economics
Cognitive reflection test
Decision theory
Dual process theory
List of cognitive biases
Outline of thought
Peak–end rule
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External links
Thinking, Fast and Slow (http://www.wellread.eu/?ASIN=0141033576) A selection of
summaries of Thinking, Fast and Slow by WellRead
How To Think Fast & Slow (https://www.penguin.com.au/products/9780141033570/thinking-
fast-and-slow/19281722/how-think-fast-and-slow), excerpt at Penguin Books Australia
Daniel Kahneman changed the way we think about thinking. But what do other thinkers
think of him? (https://www.theguardian.com/science/2014/feb/16/daniel-kahneman-thinking-f
ast-and-slow-tributes) - Various Interviews about Kahneman and Thinking, Fast and Slow in
an article in The Guardian.
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