Thinking, Fast and Slow

Thoughtful, applicable, insightful, entertaining. I enjoyed dissecting the numerous thought experiments and studies for merit that I could apply to my everyday thinking. System 1 and System 2 form the backbone of this book. System 1 is impulsive, and provides heuristic and intuitive guesses and reactions to stimuli without prompting. It can't be turned off. Why You See Is All There Is (WYSIATI). But it's also responsible for remarkably well-tuned intuitions, fast information-processing, "muscle memory," pattern-matching, intensity matching, face & situation recognition, and much of what makes human minds human. Author Daniel Kahneman points out situations in which System 1 is scientifically poor, including statistics (like the difference between 0.01% and 0.001%), random events, weighting time & duration in retrospect. System 2 is more calculated, requires devoted effort and concentration in rationalizing & making decisions. It assigns value to past events, keeps score, questions bias, and carries out more intensive, deliberate calculations involving more data. It's like fetching data from main memory, rather than relying on the cache. Kahneman's prose is rich with examples and experimental case studies, from visceral phenomena like pleasure vs. pain tolerance, and the tendency to derive general from specific, rather than the specific from the general (statistic).... to logic fallacies like optimism in planning, misjudging statistics, underestimating sampling, and sunk costs. He gives simple, easy-to-remember names to a lot of the phenomena he observed in studies, like the peak-end rule that describes how humans tend to judge pain or pleasure of a past event based on an average of how it ended and the peak of the experience, neglecting duration. He also provides solutions and checks & balances that can help us reduce bias, where possible. For example, to mitigate the planning fallacy, he writes: 1.) Identify an appropriate reference class. 2.) Obtain the statistics of the reference class. Use the statistics to generate a baseline prediction. 3.) Use specific information about the case to adjust the baseline prediction, if there are particular reasons to expect the optimistic bias to be more of less pronounced in this project than in others of the same type. The author's life experiences, from serving as an evaluator in the Israeli defense forces to publishing papers as a professor, inform many of the studies and give them a human element and interest to which I could easily relate. I also appreciate his emotion, adding exclamation points to the observations that surprised him, or proved him wrong. He writes in an unassuming, humble, curious way that made each anecdote or cited study a joy to read. Finally, I thought he -- and his editors -- divided the book brilliantly. Chapters are short, usually 8~16 pages, and they always concentrate on some nugget or fallacy that could be later referenced by a single term, like "anchoring," "regression to the mean," "the fourfold pattern," or "the halo effect." He builds up knowledge brick by brick, experiment by experiment, that after a few nights of reading, you begin to recognize fallacies and patterns in everyday life by the terms Kahneman has assigned to them. My favorite part of each chapter is the end: a short section of quotations that describe and use key terms from the chapter, in an everyday, relatable way. There are too many topics and quotes to list them all. Some of my favorites: "The best we can do is a compromise: learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high. The premise of this book is that it is easier to recognize other people's mistakes than our own." "Self-control requires attention and effort." "His System 1 constructed a story, and his System 2 believed it. It happens to all of us." "They didn't want more information that might spoil their story. WYSIATI." "We often compute much more than we want or need. I call this excess computation the mental shotgun. It is impossible to aim at a single point with a shotgun because it shoots pellets that scatter, and it seems almost equally difficult for System 1 not to do more than System 2 charges it to do." "Money-primed people become more independent than they would be without the associative trigger." "He was asked whether he thought the company was financially sound, but he couldn't forget that he likes their product." "Our aim in the negotiation is to get them anchored on this number." "Let's make it clear that if that is their proposal, the negotiations are over. We do not want to start there." "When the evidence is weak, one should stick with the base rates." "They added a cheap gift to the expensive product, and made the whole deal less attractive. Less is more in this case." "System 1 can deal with stories in which the elements are causally linked, but it is weak in statistical reasoning." "The experiment shows that individuals feel relieved of responsibility when they know that others have heard the same request for help." "We can't assume that they will really learn anything from mere statistics. Let's show them one or two representative individual cases to influence their System 1." "But those with the most knowledge are often less reliable. The reason is that the person who acquires more knowledge develops an enhanced illusion of her skill and becomes unrealistically overconfident." "The question is not whether these experts are well trained. It is whether their world is predictable." "The research suggests a surprising conclusion: to maximize predictive accuracy, final decisions should be left to formulas, especially in low-validity environments." "In this view, people often (but not always) take on risky projects because they are overly optimistic about the odds they face." "A well-run organization will reward planners for precise execution and penalize them for failing to anticipate difficulties, and for failing to allow for difficulties that they could not have anticipated --the unknown unknowns." "She is the victim of a planning fallacy. She's assuming a best-case scenario, but there are too many different ways for the plan to fail, and she cannot foresee them all." "He weighs losses about twice as much as gains, which is normal." "Think like a trader! You win a few, you lose a few." "Decision makers tend to prefer the sure thing over the gamble (they are risk averse) when the outcomes are good. They tend to reject the sure thing and accept the gamble (they are risk seeking) when both outcomes are negative." "We are hanging on to that stock just to avoid closing our mental account at a loss. It's the disposition effect." "The salesperson showed me the most expensive car seat and said it was the safest, and I could not bring myself to buy the cheaper model. It felt like a taboo tradeoff." "Did he really have an opportunity to learn? How quick and how clear was the feedback he received on his judgments?" "We want pain to be brief and pleasure to last. But our memory, a function of System 1, has evolved to represent the most intense moment of an episode of pain or pleasure (the peak) and the feelings when the episode was at its end. A memory that neglects duration will not serve our preference for long pleasure and short pains." There are many, many more. Read the book for yourself and enjoy the wisdom!

Thinking, Fast and Slow by Daniel Kahneman “Thinking, Fast and Slow” is a fascinating look at how the mind works. Drawing on knowledge acquired from years of research in cognitive and social psychology, Nobel Prize Winner, Dr. Daniel Kahneman delivers his magnum opus on Behavioral Economics. This excellent book focuses on the three key sets of distinctions: between the automatic System 1 and the effortful System 2, between the conception of agents in classical economics and in behavioral economics, and between the experiencing and the remembering selves. This enlightening 512-page book is composed of thirty-eight chapters and broken out by the following five Parts: Part I. Two Systems, Part II. Heuristics and Biases, Part III. Overconfidence, Part IV. Choices, and Part V. Two Selves. Positives: 1. Award-winning research. A masterpiece of behavioral economics knowledge. Overall accessible. 2. Fascinating topic in the hands of a master. How the mind works. The biases of intuition, judgment, and decision making. 3. Excellent format. Each chapter is well laid out and ends with a Speaking of section that summarizes the content via quotes. 4. A great job of defining and summarizing new terms. "In summary, most of what you (your System 2) think and do originates in your System 1, but System 2 takes over when things get difficult, and it normally has the last word." 5. Supports findings with countless research. Provides many accessible and practical examples that help readers understand the insightful conclusions. 6. A great job of letting us what we know and to what degree. "It is now a well-established proposition that both self-control and cognitive effort are forms of mental work." 7. You are guaranteed to learn something. Countless tidbits of knowledge throughout this insightful book and how it applies to the read world. "The best possible account of the data provides bad news: tired and hungry judges tend to fall back on the easier default position of denying requests for parole. Both fatigue and hunger probably play a role." 8. The differences of Systems 1 and 2 and how they function with one another. "System 1 is impulsive and intuitive; System 2 is capable of reasoning, and it is cautious, but at least for some people it is also lazy." "System 1 is gullible and biased to believe, System 2 is in charge of doubting and unbelieving, but System 2 is sometimes busy, and often lazy." 9. Important recurring concepts like WYSIATI (What You See Is All There IS). "You surely understand in principle that worthless information should not be treated differently from a complete lack of information, but WYSIATI makes it very difficult to apply that principle." 10. Understanding heuristics and biases. "The strong bias toward believing that small samples closely resemble the population from which they are drawn is also part of a larger story: we are prone to exaggerate the consistency and coherence of what we see. The exaggerated faith of researchers in what can be learned from a few observations is closely related to the halo effect, the sense we often get that we know and understand a person about whom we actually know very little. System 1 runs ahead of the facts in constructing a rich image on the basis of scraps of evidence. A machine for jumping to conclusions will act as if it believed in the law of small numbers. More generally, it will produce a representation of reality that makes too much sense." 11. Paradoxical results for your enjoyment. "People are less confident in a choice when they are asked to produce more arguments to support it." 12. Understanding how our brains work, "The world in our heads is not a precise replica of reality; our expectations about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed." 13. Wisdom. "'Risk' does not exist 'out there,' independent of our minds and culture, waiting to be measured. Human beings have invented the concept of “risk” to help them understand and cope with the dangers and uncertainties of life. Although these dangers are real, there is no such thing as 'real risk' or 'objective risk.'" Bonus. "To be useful, your beliefs should be constrained by the logic of probability." 14. You will learn lessons that are practical. "Rewards for improved performance work better than punishment of mistakes." 15. An interesting look at overconfidence. "Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance." "Remember this rule: intuition cannot be trusted in the absence of stable regularities in the environment." 16. Have you ever had to plan anything in your life? Meet the planning fallacy. "This may be considered the single most important piece of advice regarding how to increase accuracy in forecasting through improved methods. Using such distributional information from other ventures similar to that being forecasted is called taking an “outside view” and is the cure to the planning fallacy." 17. A very interesting look at Econs and Humans. "Economists adopted expected utility theory in a dual role: as a logic that prescribes how decisions should be made, and as a description of how Econs make choices." 18. Prospect theory explained. "The pain of losing $900 is more than 90% of the pain of losing $1,000. These two insights are the essence of prospect theory." 19. Avoiding poor psychology. "The conclusion is straightforward: the decision weights that people assign to outcomes are not identical to the probabilities of these outcomes, contrary to the expectation principle. Improbable outcomes are overweighted—this is the possibility effect. Outcomes that are almost certain are underweighted relative to actual certainty. The expectation principle, by which values are weighted by their probability, is poor psychology." 20. Great stuff on well being. 21. An excellent Conclusions chapter that ties the book up comprehensively. Negatives: 1. Notes not linked up. 2. No formal separate bibliography. 3. Requires an investment of time. Thankfully, the book is worthy of your time. 4. The book overall is very well-written and accessible but some topics are challenging. 5. Wanted more clarification on how Bayes's rules work. In summary, a masterpiece on behavioral economics. Dr. Kahneman shares his years of research and provides readers with an education on how the mind works. It requires an investment of your time but it so well worth it. A tremendous Kindle value don't hesitate to get this book. I highly recommend it! Further suggestions: "Subliminal" by Leonard Mlodinow, "Incognito" by David Eagleman, "Switch" by Chip and Dan Heath, “Drive: The Surprising Truth about What Motivates Us” by Daniel H. Pink, “Blink” by Malcolm Gladwell, “The Power of Habit” by Charles Duhigg, “Quiet: The Power of Introverts in a World That Can't T Stop Talking” by Susan Cain, "The Social Animal" by David Brooks, "Who's In Charge" Michael S. Gazzaniga, "The Belief Instinct" by Jesse Bering, "50 Popular Beliefs that People Think Are True" by Guy P. Harrison, "The Believing Brain" by Michael Shermer, "Predictably Irrational" by Dan Ariely, "Are You Sure?" by Ginger Campbell, and "Mistakes Were Made But Not By Me" by Carol Tavris.

A scientist's look at how we think Review of Kahneman's Thinking, fast and slow by Paul F. Ross A friend called Kahneman's book to my attention. I purchased it immediately and put it at the top of my stack of "to be read" books. Having finished the read just a day ago, writing my impressions immediately is important to catching the details of my observations, the yin and yang of this book. The work, indeed, captures my high interest. Kahneman, psychologist at Princeton University, is known for his work on understanding people as they interact with "the economy," work Kahneman did in concert with Amos Tversky. The work won the 2002 Nobel prize in economics for having persuaded economists that humans, contrary to the assumptions long a part of economists' theories of people as economic actors, do _____________________________________________________________________________________ Kahneman, Daniel Thinking, fast and slow 2011, Farrar, Straus and Giroux, New York NY, vi + 499 pages _____________________________________________________________________________________ not always consider all the information available to them and make choices in their own individual best interests with respect to wealth. The difference between Econs and Humans, these labels adopted from today's economist Richard Thaler, is one of the continuing themes of Kahneman's story. Daniel Bernoulli (d. 1782, he and Adam Smith working at the same time ... there being not a single reference in Kahneman to Adam Smith) proposed that people make their economic choices so as to maximize the decision-maker's own wealth. Kahneman sees too many economists today, including several from the highly regarded (University of) Chicago School, as accepting this erroneous view of economic actors (as Econs) and failing to understand that people (as Humans) are influenced in their choices by many circumstances well beyond the decision's outcome as it affects the decision-maker's wealth. This book is Kahneman's explanation for the general reader about the work which won the Nobel prize. In thirty nine chapters divided into five parts, Kahneman makes distinctions between Econs and Humans, between associative memory that thinks fast using simplified relationships (he calls it System 1) and analytical mental processes which think slowly and, prodded into doing work, can cope with complexity (he calls it System 2), between heuristics and biases in thinking, between choices as Econs make choices and choices as Humans make choices, between the influence of the decision's frame and the details of the choice itself, between broadly framed decision-making and narrowly focused decision-making. The publisher reprints as appendices the 1974 paper in Science by Tversky and Kahneman (Judgment under uncertainty: heuristics and biases) and the 1984 paper in American Psychologist by Kahneman and Tversky (Choices, values, and frames) which were key steps in winning widespread recognition for their work. "Prospect theory," described in their 1984 paper, was a step in their thinking that showed the sharp distinction Humans make between gains and losses. Kahneman and Tversky can be classified among the behavioral economists who do experiments with people in choice-making exercises to uncover the regularities and irregularities in, the influences upon, peoples' decisions. I thoroughly enjoy this work by Kahneman (Tversky died in 1996) especially because it shows so distinctly the observed-in-experiments, evidence-based foundations for psychology and psychology's claim to understanding human behavior. I enthusiastically recommend the read for those thoughtfully interested in people and people-effects on our individual lives as well as our shared lives in organizations, governments, and cultures. Walk up and down the aisles of the local large bookstore looking for psychology and one finds self help books that present "ways to think about" our lives, implying by their very structure and presentation that all one needs to do to understand self and others is to take thought. That's pure nonsense, yet that's the modal view - actually it's almost the only view - of how psychological science gets built. For those willing to read the footnotes, Kahneman thoroughly undoes this view. Psychology, as all psychologists should know, is built upon empirical investigations of human behavior. It is something of a bitter joke that it should take two psychologists to persuade economists that human beings make economic decisions using inputs well beyond the wealth-maximizing rule posited by Bernoulli in the 18th century. Yet, as Kahneman states so clearly in his chapter titled Conclusions, there are still many economists who continue to use the Econ model of the human being as the individual economic actor. The subject of economics is taught in universities with Econ as the decision-making universal actor for all humankind. The Econ model is simply incomplete as a model for the individual actor and obviously even has its difficulties in accurately forecasting group behavior as we are learning through hard lessons in our inadequately understood attempts in Keynesian economics following the 2008-2009 economic downturn, efforts we make as we grope for economic recovery. Begin reading Kahneman's book by first reading the chapter on Conclusions, the last in the book. While that may prove a bit difficult because of the unfamiliar concepts presented as key words or phrases (Econs, Humans, System 1, System 2, prospect theory, utility theory, etc. etc.), the reader can quickly learn some of the handles that Kahneman uses and, particularly, the view of politics and society from which he thinks and writes. Then, of course, read the Conclusions again as you finish the book. Very much admiring this work by the behavioral economists and by the neurobiologists in exploring human behavior with respect to economic choices, I'm also critical. Psychologists and thoughtful readers need to know not only the achievements of this work but also its shortfalls ... thus perhaps avoiding frustrations in the reading and errors of overgeneralization for the findings. First, one of the rules of science is that it seek the simplest possible explanations for the phenomena being explored. Kahneman has the difficult task of speaking from and to both psychological and economics backgrounds, sometimes also adding neuroscience. In taking on that task, he refers to concepts and data from all three disciplines. Sometimes the concepts are closely related, almost duplicates. Needing to communicate with two or three highly specialized audiences, Kahneman uses the several terminologies and offers the reader no charts or tables listing, classifying, and simplifying the concepts. A tour through the book's index turns up ... affect heuristic, anchoring index, associative coherence, associative memory, availability cascades, baseline predictions, base rates, broad framing, broken-leg rule, causal base rates, causal stereotypes, cognitive ease, cognitive illusion, cognitive strain, coherence, competition neglect, confirmation bias, conjunction fallacy, decision utility, decision weights, decorrelated errors, default options, disposition effect, duration neglect, duration weighting, econs, ego depletion, emotional coherence, endowment effect, evaluability hypothesis, expectation principle, expected utility theory, experienced utility, flowers syllogism, focusing illusion, fourfold pattern, halo effect, happiness, hedonimeter, hubris hypothesis, ideomotor effect, indifference map, joint evaluations, judgment heuristics, law of small numbers, less-is-more pattern, loss aversion, loss aversion ratio, mental shotgun, narrative fallacy, narrow framing, negativity dominance, neuroeconomics, norm theory, one-sided evidence, optimistic bias, outcome bias, peak-end rule, planning fallacy, possibility effect, precautionary principle, preference reversals, pretentiousness language, priming, probability neglect, professional stereotypes, prospect theory, psychopathic charm, rational-agent model, reciprocal priming, recognition-primed decision, reference class forecasting, retrievability of instances, risk assessment, risk aversion, risk seeking, selves, single evaluations, somatic marker hypothesis, structured settlements, sum-like variables, sunk-cost fallacy, System 1, System 2, theory-induced blindness, utility theory, validity, vividness, wealth, well-being, WYSIATI ... and this is indeed a complex mapping of what is intended to be a joined and simplified configuration explaining human thinking particularly as it is exercised in decisions about economic choices. I respect Kahneman's intent. His characterization of System 1 and System 2 is an important and simplified communication. I think he could do an even better job at simplifying what he is teaching, particularly by using tables and other means for classifying, grouping, his concepts. Of course, other bright people have similar problems. The physicists have their Standard Model of seventeen particles and forces classified as fermions and bosons, quarks and leptons, and that is not simple enough to allow the rest of us to keep firmly in mind what these seventeen particles-forces and several classifications mean ... nor does it explain mass, astronomy's dark matter, or even gravity! Communicating science simply often is no easy task. However it is an essential task if science is to have any use beyond mental stimulation. This reader demands that science, in its most valuable form, be useful. Communicating science simply is a task that must be mastered on the way to making one's science maximally useful. Kahneman, as do the behavioral economists generally, is reporting experiments that have been run, primarily, with college students as participants ... and not even with a representative group of college students. They come heavily from UC Berkeley, U of Oregon, Michigan U ... very selective places where Kahneman and Tversky have taught and their graduate students have done work in the mode of their teachers. A few years ago I entered a conversation with a respected colleague, a colleague much better informed than am I on these matters, at The Ohio State University. "Psychology built upon studies with college sophomores must be questioned," I insisted. "Not so," he responded. "The work frequently generalizes well to the general population." The work Kahneman highlights so well in this book is work built heavily upon experiments run with college students as the participants. Despite these assurances from very able scholars, I cannot brush from my memory the very impressive account that Herrnstein and Murray (1994) presented in their controversial The bell curve which followed a representative cohort of American youth through a rather lengthy part of their life span (maybe age 12 to age 42 ... I don't recall accurately and, as I write now, am setting aside the task of looking it up). The work showed that life as experienced by youth at the high end of the bell curve on intelligence was a very, very different experience from life experienced by youth at the low end. Those at the low end seemed to find life a blooming, buzzing confusion and they got into lots of trouble. Their minds worked differently from the minds of their peers who found themselves to be college eligible and, in many instances, got that education. The evidence was overwhelmingly clear in life's outcomes (current income, marriage, need for and use of social support networks, use of drugs, crime rates, divorce, time in jail, . . .). The people in this longitudinal study had not yet reached the ends of their lives! Having taken the Herrnstein and Murray findings to heart, I think I might be relatively safe in transferring what I learn in Kahneman's book to the professionals and executives I have met in working with organizational leaders, but I'm still not convinced, despite my colleague's assurance from his superior and more current knowledge, that findings learned with college students as the participants can be assumed to be true for all human beings. The behavioral and management sciences (psychology and economics included) receive a tiny fraction of the world's R&D funding. They are regarded by the college educated populations of the world as second class sciences, at best, and probably not sciences at all. Kahneman's book is a stout statement very much, and appropriately, in the face of this non-knowledge. But to win public support and public funding, to have what is known by these sciences at work in reducing problems that the world faces every day, to see these sciences contribute practices that enhance human well-being, it is absolutely essential that what the sciences know be communicated to opinion leaders - those who escaped college without having learned much about these sciences - in a way that is accurate, clear, and understandable. As shown by the list of ideas from the index of Kahneman's book, I think Kahneman has not yet formed the clearest and most communicable framework for his core ideas and that he, like the rest of us, needs to spend more time practicing communication with able people (non-scientist students and adults) and converting what he learns into written form. Our behavioral and management sciences have much they already know that could significantly relieve problems and add immensely to well-being. Accomplishing those prospective outcomes depends upon us scientists communicating what we know to audiences like those Kahneman is addressing in this book. Read this book. You'll find you've profited. Bellevue, Washington 19 December 2011 References Herrnstein, Richard J. and Murray, Charles The bell curve: Intelligence and class structure in American life 1994, The Free Press, New York NY Kahneman, Daniel Thinking, fast and slow 2011, Farrar, Straus and Giroux, New York NY Copyright (c) 2011 by Paul F. Ross All rights reserved.

This is an invaluable book that every person who considers him/herself educated should read - even study. Indeed, it is a scandal that mastering the material in this book isn't considered an essential component of a high school education. The author was awarded the Nobel in Economics for his work on what he calls decision theory, or the study of the actual workings of the typical human mind in the evaluation of choices, and the book itself presents the findings of many decades of psychological studies that expose the endemic fallacious thinking that we are all prone to, more or less. The lives of all of us could be improved by lessons learned from this book, not just individually, through self-education, but also on the large scale, if the large scale decision makers in this society in and out of government could be educated as well. In fact, it is largely because these large scale decision makers are no better than the rest of us in their ability to think straight and plan well, that society is as screwed up as it is, and that essentially all of its institutions are diseased and corrupt. The lesson there, however, is that decision making needs to be returned to the individual - that the powers that be need to be deprived of their powers to mess up the lives of the rest of us. Despite the many virtues of this book - it is well-written, engaging, and its academic author reasonably restrained in the tendencies of his tribe to blathering in abstractions - it is a bit disappointing at the very end, when the author proves unable to synthesize all his material into a comprehensive theory of the thinking, and deciding mind - or at least into a set of carefully formulated principles that provide a succinct summary of the principles of human thinking, both typical and ideal. Kahneman uses throughout a construct that implies that we are of two minds: System 1 is the fast-thinking, intuitive, mind, prone to jumping to conclusions; while System 2 is the slow-thinking analytical mind, that is brought into play, if at all, only to critique and validate the conclusions that we have jumped to. System 2, we are told, is lazy, and if often just rubber-stamps the snap judgements of System 1, or if pressed, rationalize them, instead of digging critically as well as constructively into the complex underpinnings of the material and sorting them out as best it can. Instead of working this construct up into a comprehensive model of mind, K merely uses it as a loose schema for representing the kinds of thinking thought to underlie the results derived from the many psychological experiments that he here reports on. This neglect raises the question at many points as to just how well the experimenters have really understood the thinking that underlies the behavior of their subjects. But this, I am sorry to say, is a weakness of virtually all psychological experimentation, which is still just beginning to come to grips with the complexity and varieties of cognitive style of the human mind. What Kahneman does do, however, is to provide convenient labels for many characteristic types of fallacious thinking, although again, the exact role of System 1 and System 2, and their interaction, is inadequately explicated. Instead, towards the end of the book, another, somehow related, but nominally independent theme is developed: the disturbing divergence between the experiencing self and the remembering self. This is in itself such an interesting and important idea, so pregnant with both psychological and philosophical implications, that it could have used a fuller treatment, and again, there is no coherent integration of this theme with the System1/System2 construct. The idea here is that our present experience includes our most salient memories of previous experiences - for example the highlights of past vacations, or out of the ordinary episodes of our lives. Somewhat surprisingly, though, what we remember is a systematic distortion of the actual experience. Our memory collapse the duration of various aspects of our experience and highlights only the peak moment(s) and the final moments, perhaps with a nod toward the initial presentation of the experience. And this systematic distortion of the actual experience in all its fullness, can lead us to make irrational and detrimental choices in deciding whether to repeat the experience in the future. Thus, a bad ending to an otherwise wonderful experience can spoil the whole thing for us in memory, and cause us to avoid similar experiences in the future, even though by simply anticipating and improving the ending we might make the whole experience as wonderful as most of the original was. Likewise, subjects in experiments involving either long durations of pain, or much shorter episodes of pain with a higher peak, were consistently more averse to the latter rather than the former - or they overemphasized the way these presentations ended as a factor in judging them as a whole. These are important findings that go the heart of the question of how best to steer our course through life, but here is the only attempt at integration of this remembering vs experiencing self theme, and the System 1/ System 2 theme that I find in the final chapter, Conclusions: "The remembering self is a construction of System 2. However, the distinctive features of the way it evaluates episodes and lives are characteristics of our memory. Duration neglect and the peak-end rule originate in System 1 and do not necessarily conform to the values of System 2". There is more here, but it merely repeats the earlier analysis of the relevant experiments. No evidence is presented as to the respective roles of System 1 and System 2 with respect to the laying down of memory, to its decay, or with respect to a recently discovered phenomenon: memory reconsolidation. Nor is any account taken of what has been learned, much of it in recent decades, about the interactions between short, intermediate, and long term memory, or any of the radically different modalities of episodic (picture strip) and semantic (organized, abstracted) memory. Consequently, Kahneman's vague reference to the "characteristics of our memory" is essentially a ducking of the question of what the remembering self is. I think that at best, the finding of the replacement of the original experience by an abstract predicated on peak-end bias is an exaggeration, though there's no question that "duration neglect" is in operation, and a good thing too, unless K means by "duration neglect" not just the stretches of minimally changing experience (which have little memorial significance anyway, but even the consciousness of how long the edited out parts were (this distinction was never made in Chapter 35, where the theme of the remembering vs. the experiencing self is first taken up). Speaking for myself anyway, I have a much fuller memory of my most important experiences than Kahneman seems to indicate. Naturally the highlights are featured, but what I tend to remember are representative moments that I took conscious note of at the time, as though making a psychological photograph. I remember these moments also because I bring them up from time to time when I'm thinking about that experience. For example, I'm thinking now of a long distance race I did in 2014 (a very tough half-marathon, with almost 2000' of climbing). I remember: the beginning section as well as the ending section; each of the rest stations; certain moments of each of the major hill climbs; at least one moment from each of the descents; and a number of other happenings during the almost three hour event. For me in this race, the peak experience occurred right at the end, when I all but collapsed, yet managed to stagger to the finish line. That ending does naturally come first to mind as a representation of the entire event, but it is merely the culmination of a long and memorable experience with many moving parts, and if I want, my remembering self can still conjure up many other moments, as well as a clear sense of the duration of each of the sections of the course. Over many years most memories fade, and it's certainly reasonable to suppose that in extreme cases, where they are all but forgotten, only a single representative moment might be retained. However, if we can say anything for sure about memory it is this: we remember what we continue to think of and to use, and we do that precisely because this material has continuing importance to us. The recent research in memory reconsolidation tells us that when we do bring up memories only occasionally, we reinforce them, but we also edit and modify them to reflect our current perspectives, and sometimes we conflate them with other seemingly related knowledge that we've accrued. We are thus prone to distort our own original memories over time, in some cases significantly, but we may still retain much more of the original experience that just the peak and the end, and if we do reinterpret our memories in the light of more recent experience, that's not necessarily a bad thing. In any case, the memories that occur in the present may be said to be a joint project of the experiencing as well as the remembering self, which rather erodes the whole Two Selves concept that Kahneman first posited. I do not mean to criticize the valuable evidential material in the book, and in general I think that Kahneman, and the other researchers and thinkers whom he quotes, have drawn reasonable conclusions from the experiments they report on. But ultimately, the book, as well as the fields both of psychology and brain neurophysiology suffer both in coherence and meaningfulness because they aren't predicated on a more comprehensive theory of mind. It's the old story in science, first formulated by Karl Popper in his 1935 book, The Logic of Scientific Discovery: unless we approach the data with an hypothesis in mind - unless, indeed, we seek out data likely to be relevant to a particular hypothesis, we're not going to make any enduring progress in understanding that data in a comprehensively meaningful way, let alone be able to make falsifiable deductions about elements of the system for which we have at present no data. Popper's quotation from the German philosopher Novalis comes to mind - "Theories are nets: only he who casts will catch." In the final, "Conclusions", chapter, K caricatures the abstract economists' model of homo econimicus (man as a rational optimizer of his utility), contrasting it with the more sophisticated and experientially grounded model of psychologists such as himself. In keeping with his penchant for framing (or spinning) his presentation favorably to his own perspective, he calls the economists' model "Econ", and his own "Human". In fact, "Econ" was never meant to represent man in all his humanity, and Kahneman's Economics Nobel, recognizing his decision theory contributions to economics, was preceded by many other Nobels to economists who had been expanding the concept of the economic actor into psychological territory for decades. In fact, the essential view of the Austrian economists dating from the 1920s (von Mises, Hayek, and their predecessors) is that economics is in the end wholly dependent on psychology because it is predicated on the unknowable, unquantifiable subjective value preferences of humans, acting individually and in concert. Cautious generalizations can perhaps be made about human psychology in general, but I think that on the whole the Austrians have been a bit wiser in their restraint than Kahneman and his many, and mostly lesser, pop psychology compatriots have proved in their often sensationalist extrapolations from lab experiments. Here is an example, I think of Kahneman over-reaching. He speaks repeatedly of the laziness of System 2, and its foot dragging reluctance to get involved in the thinking process, but in the real world, snap judgements are good enough for immediate purposes, and the better part of rationality may be to go with one's fast thinking intuitive System 1: indeed, Kahneman acknowledges this himself in passing, both in his beginning and his ending, but this isn't enough to counterbalance the overall argument of his book. Kahneman also, in his final chapter, speculatively extends his findings into the political sphere (his liberal Democratic Party bias has already been made clear by gratuitous and somewhat annoying usage of salient modern politicians in examples), but not to any great effect. Kahneman advocates "libertarian paternalism" consisting of government programs that people are enrolled in automatically unless they opt out by checking a box on forms - thus manipulating the presentation frame so as to trick them into signing on to what some government bureaucrat thinks is good for them. Of course, as long as people are allowed to opt out, one can't call the choice here anything but libertarian, though to be consistent with their socialist mores, liberals like Kahneman really ought to object to such practices as being manipulative advertising. This libertarian finds nothing objectionable about the way such a choice might be presented - after all, the average man, if adequately educated and prepared for the real world, should have no trouble seeing through the frames. What is not only paternalistic, but totalitarian in spirit, is the extortion of taxpayer money to finance such government programs in the first place. Somehow, it fails to occur to Kahneman that most people could be trained to recognize and avoid fallacious thinking during all those years of enforced and mostly wasteful schooling - just as most people can be trained to recognize the Müller-Lyer illusion for what it is. IMO every high school graduate should be required to learn to recognize and avoid the paradigm cases of fallacious thinking presented in Thinking, Fast, and Slow, and this material could profitably be expanded to cover the many rhetorical tricks used by the manipulators and spinmeisters, both public and private, who batten off of our society. With such training in critical thinking, and with the reintroduction of enough honest and rigor to begin high school graduates up to the 12th grade reading and writing proficiencies that were routine in the 1950s, the need for college as life preparation would be altogether obviated, and most young people could avoid wasting their early years in college, piling up debt, and get on with their work and/or their self-education, as they chose.

There are an increasing number of books that provide insight into how our minds work. Emotional Intelligence by Daniel Coleman and The Wisdom of Crowds by James Surowiecki are two good examples. Daniel Kahneman, in Thinking Fast and Slow, picks up that theme and advances it by an order of magnitude. In my view, this is the must read book of the year, and absolutely required read for anyone over fifty. Each of us know that there are parts of our brain that toil away ceaselessly regulating breathing and blood pressure, managing digestion and keeping our heart beating on schedule without us being consciously aware of it. From other books like Emotional Intelligence, we know that there is also a high-speed circuit that responds to stimulus far faster than conscious thinking. There are numerous examples. Touch something hot with your hand and you'll move it before you actually feel the pain. See someone you know in a busy airport or train station? Not only will you recognize them instantly, you'll know if they are sad or angry - our brains are hard-wired with high-speed circuits for facial recognition. Mr. Kahneman, through a series of examples, tests, incorporation of original research and reports of research from others, informs us that our autonomous brain does far more, including a lot of things that we should be doing with our conscious thoughtful brain, but we don't. He uses the term System 1 for the autonomous function and System 2 for our thoughtful, conscious brain. System 1 is fast, intuitive and emotional. System 2 is slower, more deliberative and more logical. Read the book and you'll know that System 1 is doing a lot of stuff. Most is either critical and performed well, or performed poorly but unimportant, but a certain part is done because of laziness or a concentration failure on our part, and would be much better managed by System 2. The first few chapters are reasonably easy read and full of interesting little quizzes. You'll probably answer some of those quizzes wrong, and it will be because you let rapid-fire System 1 come up with the answer instead of deliberating with System 2. One of these tests (I won't give it away) was given to a class at Princeton, conceivably some of the best and brightest in the country, and a majority of them failed, so don't feel too bad if you fail it also. However, I must warn you that the content gets harder. I'm reasonably literate in at least basic statistics, and I found myself challenged a number of times. On more than one occasion, I didn't understand the answer even when Kahneman gave it to me. After proving to us that we let System 1 interfere when it shouldn't, Kahneman provides chapters on our various thinking and logic errors and guidance on what to be on guard for to make sure we put System 2 in charge, and we prevent the vast number of thinking shortcuts that lead to suboptimal decisions. There are chapters on how a tired and overloaded brain makes bad decisions. How we tend to be poor assessors of risk, overly concerned about low probability events and not sufficiently concerned about riskier activities. This extends into how humans make investment decisions. I found the chapter on "Anchoring", that is, how we attach value to a reference number, even if we shouldn't, particularly useful, and very valuable when approaching a negotiation. There is thoughtful, research-based advice on when to rely on an "expert" and when not. Why do I say that this is a must read for anyone over fifty? Let's face it. Once we've crossed that line - maybe fifty for some of us, sixty or even seventy for others, we simply don't think as fast. Do you watch the famous game show Jeopardy? Generally I can hold my own with many contestants. I know a lot of the answers. However, I also know that I can no longer come up with those answers fast enough. The contestants buzz in way too fast for me. There is research on the ability of us in our second fifty years to make wise investments. It turns out that not too many of us are Warren Buffet. We need to be cautious and thoughtful when putting our money to work. This book provides very valuable insight into our unconsciously lazy mental habits and equally unconscious thinking errors. It is a must-read.

Back in 1994, Massimo Piattelli-Palmarini, Director of the Institute of San Raffaele in Milan, Italy, wrote a charming little book about common cognitive distortions called Inevitable Illusions. It is probably the very first comprehensive summary of behavioral economics intended for general audience. In it, he predicted that the two psychologists behind behavioral economics - Amos Tversky and Daniel Kahneman - would win the Nobel prize. I didn't disagree with the sentiment, but wondered how in the world were they going to get it since these two were psychologists and there is no Nobel prize in psychology. I didn't think there was much chance of them winning the Nobel Prize in economics. I was wrong and Piattelli-Palmarini was right. Kahneman won the Nobel prize in Economic Sciences. (Tversky unfortunately prematurely passed away by this time.) Just as Steve Jobs who was not in the music industry revolutionized it, the non-economists Kahneman and Tversky have revolutionized economic thinking. I have known Kahneman's work for quite some time and was quite excited to see that he was coming out with a non-technical version of his research. My expectations for the book were high and I wasn't disappointed. Since other reviewers have given an excellent summary of the book, I will be brief in my summary but review the book more broadly. The basis thesis of the book is simple. In judging the world around us, we use two mental systems: Fast and Slow. The Fast system (System 1) is mostly unconscious and makes snap judgments based on our past experiences and emotions. When we use this system we are as likely to be wrong as right. The Slow system (System 2) is rational, conscious and slow. They work together to provide us a view of the world around us. So what's the problem? They are incompatible, that's what. System 1 is fast, but easily swayed by emotions and can be as easily be wrong as be right. You buy more cans of soup when the display says "Limit 12 per customer". We are on autopilot with this system. System 1 controls an amazing array of behavior. System 2 is conscious, rational and careful but painfully slow. It's distracted and hard to engage. These two systems together provide a backdrop for our cognitive biases and achievements. This very well written book will enlighten and entertain the reader, especially if the reader is not exposed to the full range of research relating to behavioral economics. This book serves an antidote to Malcolm Gladwell's Blink. Although Gladwell never says that snap judgments are infallible and cannot badly mislead us, many readers got a different message. As the Royal Statistical Society's Significance magazine put it "Although Gladwell's chronicle of cognition shows how quick thinking can lead us both astray and aright, for many readers Blink has become a hymn to the hunch." While Kahneman does show how "fast thinking" can lead to sound judgments, he also notes how they can lead us astray. This point is made much more clearly and deliberately in Kahneman's book All my admiration for the brilliance and creativity of Kahneman (and Tversky) does not mean that I accept 100% of their thesis. Consider this oft-quoted study. Linda is 31 years old, single, outspoken, and very bright. As a student, she was deeply concerned with the issues of discrimination and social justice, and she also participated in anti-nuclear demonstrations. Which is more probable? 1. Linda is a bank teller. 2. Linda is a bank teller and is active in the feminist movement. Eighty-five percent of test subjects chose the second option, that Linda was a bank teller and active in the feminist movement. Kahneman's interpretation is that this opinion is wrong because the probability of a (random) woman being a bank teller is greater that than person's being a bank teller AND a feminist. What Kahneman overlooks here is that what most people answered may not be the question that was asked. The respondents may not have been concerned with mathematical probabilities, but rather could be responding to the question in reverse: Is it more likely for a current activist to have been an activist in the past compared to others in the profession? A more formal and theoretically better argued rebuttal of some of Kahneman's hypotheses can be found in the works of Gerd Gigerenzer. Kahneman notes that even top performers in business and sports tend to revert to the mean in the long run. As a result, he attributes success largely to luck. I'm not so convinced of this. There can be alternative explanations. People who achieve high degree of success are also exposed to a high degree of failure and the reversion to the mean may be attributable to this possible mirror effect. Spectacular success may go with spectacular failure and run-of-the-mill success may go with run-of-the-mill failure. Eventually everyone may revert the mean, but the ride can be very different. Chance may not account for that. Another concern is that much of the work is done in artificial settings (read college students). While much of what we learnt can perhaps be extended to the real world, it is doubtful every generalization will work in practice. Some may find Kahneman's endorsement of "libertarian paternelism," not acceptable. More importantly, when applied to the real world it did not always found to work. In spite to these comments this book is written carefully in a rather humble tone. I also appreciated Kahneman's generous and unreserved acknowledgement of Tversky's contributions and his conviction that, had he been alive, Tversky would have been the co-recipient of the Nobel Prize. My cautionary comments probably have more to do with the distortions that might arise by those who uncritically generalize the findings to contexts for which they may not applicable. As mentioned earlier, the wide misinterpretation of Gladwell's Blink comes to mind. Nevertheless, Thinking Fast and Slow is a very valuable book by one of the most creative minds in psychology. Highly recommended. For a more complete and critical understanding, I also recommend the writings of the critics of behavioral economic models such as Gerd Gigerenzer. PS. After I published this review, I noticed an odd coincidence between Thinking Fast and Slow and Inevitable Illusions that I mentioned in my opening paragraph. Both books have white covers, with an image of a sharpened yellow pencil with an eraser top. How odd is that?

Good book but difficult to read due to small print.

I picked up Thinking, Fast and Slow and found it to be a deeply insightful and thought provoking read. It breaks down how we think in a way that is clear and eye opening, showing the difference between fast instinctive thinking and slower more deliberate reasoning. The ideas are explained in a way that makes you stop and reflect on your own decisions in everyday life. It is the kind of book that stays with you and changes how you look at thinking and decision making.

Hard cover. Very good quality. Finished reading first two chapters. The book essentially talks about how the mind works. This is helpful in identifying our biases and actively countering them. So definitely a read for those who are interested in understanding how does our brain impact our actions.

Même si l'expression est un cliché, disons-le sans hésitation : ce livre est un must. D'abord, songez au prestige que vous vous attirerez en glissant, au hasard d'une conversation, que vous êtes en train de lire un ouvrage signé d'un prix Nobel d'économie ! Mais surtout, cet ouvrage constitue une plongée des plus passionnantes dans les arcanes de l'esprit humain, sous la conduite d'un guide qui, en plus de sa profonde érudition et de son expertise, n'oublie jamais d'être accessible, pratique, voire drôle ! Plus d'une fois, au détour d'une page, vous vous surprendrez à penser : « Bien sûr, c'est cela ! », tant les démonstrations de Daniel Kahneman font écho à notre expérience quotidienne, aux mécanismes psychiques avec lesquels nous nous débattons dans notre for intérieur. Au fil des chapitres, l'auteur passe en revue les merveilles et les nombreux travers de la pensée intuitive, cette « star masquée » qui, sans que nous le réalisions, prend bien souvent le dessus sur notre esprit rationnel : hyper-sensibilité à l'environnement extérieur et à une kyrielle de biais (effet de halo, excès de confiance, etc.), tendance à poser ses conclusions d'emblée et à chercher ensuite les raisons qui les justifient, oubli des principes statistiques les plus élémentaires... Sans être inaccessible, le chapitre sur la théorie des perspectives - le domaine qui a valu à l'auteur son prix Nobel - est plus pointu et s'adresse aux lecteurs soucieux d'entrer dans le détail d'une théorie à la pointe des réflexions actuelles sur la prise de décision. Fort de ses plus de 500 pages, ce livre est un ouvrage de référence, à lire et à méditer en prenant son temps, car un contenu d'une telle richesse ne se digère pas en quelques heures.

Although the behaviorial economics economics is right now thrown doubt on because of either faked or dubious experimental records by a couple of scholars, this book impresses me with its coherent, convincing argument which reconciles with what I have been feeling about irraationality of human beings. However, that might be exactly what " System 1" of me tells me, though. This book teaches us how to exercise our "System 2" to put things in perspective so that we can enjoy more well-being as well as life satisfaction.

⭐️⭐️⭐️⭐️⭐️ (5/5) „Thinking, Fast and Slow“ – Meilenstein der Psychologie und Ökonomie 📌 Kurzfazit Kahneman, Nobelpreisträger für Wirtschaft, fasst in diesem Werk jahrzehntelange Forschung zu kognitiven Verzerrungen, Entscheidungsfindung und Heuristiken zusammen. Er erklärt die Dynamik zwischen zwei Denksystemen – dem schnellen, intuitiven „System 1“ und dem langsamen, analytischen „System 2“. Das Buch ist ein Standardwerk für alle, die verstehen wollen, warum Menschen oft irrational entscheiden. 📚 Inhalt in Kürze System 1: schnell, automatisch, intuitiv System 2: langsam, reflektiert, kontrolliert Heuristiken und Biases: Verfügbarkeitsheuristik, Anker-Effekt, Verlustaversion, Overconfidence Anwendungen: Wirtschaft, Politik, Alltagsentscheidungen Erklärung, warum klassische ökonomische Modelle (Homo oeconomicus) nicht ausreichen 🔬 Wissenschaftliche Relevanz Stärken: Umfassende Darstellung der Arbeit von Kahneman & Tversky – Grundlage der Verhaltensökonomie. Beeinflusst Ökonomie, Psychologie, Politikwissenschaft, Medizin und Management. Viele Erkenntnisse empirisch mehrfach bestätigt. Schwächen: Kritik in den letzten Jahren an der Replizierbarkeit mancher sozialpsychologischer Studien. Sehr dicht und anspruchsvoll geschrieben – kein „leichter“ Ratgeber. 👉 Fazit Wissenschaft: Trotz Kritik an einzelnen Studien bleibt das Buch ein wissenschaftlicher Eckpfeiler, weil es ein Paradigma veränderte. 🌍 Kulturelle Relevanz Weltbestseller, über 10 Mio. verkaufte Exemplare. Hat das Denken über Rationalität, Politik, Wirtschaft und Finanzen verändert. Populär in Management- und Leadership-Literatur, aber auch in Journalismus und Politik zitiert. Hat Begriffe wie „System 1 & 2“ in den kulturellen Mainstream gebracht. 💭 Meine persönliche Meinung Positiv: Tiefgründig, brillant, lehrreich. Eines der wenigen Bücher, die wirklich das Denken verändern können. Kritisch: Stellenweise schwerfällig, fast akademisch – nicht jedermanns Lesestil. Für mich: Pflichtlektüre, wenn man menschliches Verhalten verstehen will – intellektuell fordernd, aber lohnend. 🎯 Fazit Thinking, Fast and Slow ist ein epochales Werk, das die Psychologie und Wirtschaft nachhaltig geprägt hat. Es erklärt, warum wir oft systematisch falsch entscheiden – und liefert ein Vokabular, um darüber nachzudenken. ⭐️⭐️⭐️⭐️⭐️ – 5 von 5 Sternen Weil: wissenschaftlich fundiert, kulturell prägend, intellektuell bereichernd.

Surprising, unsettling, enlightening. Thank goodness for authors like this, who open our minds, challenge our prejudices, and break down our preconceptions.