Thinking Fast And Slow | Uncover the Secrets of the Mind with Daniel Kahneman
INTRODUCTION
There are two systems at work in our minds that dictate how we act: the automatic and the deliberate.
Enthralling events are unfolding within our thoughts, resembling a film narrative involving two protagonists, complete with surprises, conflicts, and strains.
System 2, who is analytical and deliberate, and System 1, who is impulsive and intuitive are these two personalities. The way we think, judge and act is shaped by their interactions as they compete with one another.
The first component of our brain, known as System 1, is responsible for quick, instinctual decisions that are frequently uncontrollable. When you hear a sudden, extremely loud noise, this system will be activated. So, what's your job?
You undoubtedly direct your focus to the noise without thinking. Here we have System 1. Being able to respond and make decisions so quickly has survival benefits, therefore this system is a holdover from our evolutionary history. When we see the area of the brain that is in charge of our reasoning, beliefs, and decision-making, we picture System 2.
Mental processes including self-restraint, decision-making, and focused attention are the subject of this branch of study.
Think of it this way: you're in a crowded place and want to find a woman. Your thoughts are laser-focused on the work at hand, and I want you to know about details about the individual and anything else that could lead you to her whereabouts. You hardly notice other individuals in the crowd because you focus intently on your actions.
If you can keep your mind sharp and not let go, you should be able to see her in a few minutes; otherwise, you will have a much more difficult time doing so. In the next insights, we'll observe that our behavior is dictated by the connection between these two systems.
Key 1: How sloth impacts our intelligence and how mistakes are made by the lazy mind
By solving this well-known bat-and-ball problem, you may observe the operation of the two systems: A $1.10 bat and ball set. There is a $1 premium over the ball price for the bat. What is the price of the ball?
The first, instinctive, and intuitive system in your brain probably came up with the wrong price—$0.10—when you were thinking about it. Perform the calculations at this same moment. Is your error clear to you?
The right answer is 0.05 dollars. What transpired was that your intuitive yet impulsive System 1 responded automatically. But the response was too rapid. System 1 normally asks System 2 to solve problems it doesn't understand, but in the bat-and-ball scenario, System 1 gets fooled.
It thinks it can solve the problem by itself because it oversimplifies it. Our inherent mental laziness is the issue that the bat-and-ball conundrum reveals. When we engage our brains, we usually try to do things with as little energy as possible. The principle of least effort describes this situation.
When we assume we can get away with just System 1, our minds won't use System 2 to check the answer because it would be more energy-consuming. Because using System 2 is a crucial part of our intelligence, this sloth is regrettable.
System-2 tasks, such as focus and self-control, are associated with higher IQs, according to the research. This is demonstrated with the bat-and-ball dilemma, where our thoughts could have avoided this typical mistake by checking the result using System 2.
The power of our intellect is being diminished due to our laziness and refusal to employ System 2.
Key 2: Why we aren't always fully in charge of our thoughts and actions: autopilot
When you see the term "SO_P" fragment, what thoughts come to mind? Most likely not. How about you think about the word "EAT" first? If you were to relook at the word "SO_P," you'd likely finish it with the letters "SOUP." Priming describes this procedure.
To be primed, we need only be exposed to a term, idea, or event for us to automatically conjure up like ones. Your guess would have been correct—"SOAP" would have been the correct completion—had the word "SHOWER" appeared above instead of "EAT." Priming affects both our thoughts and actions.
Hearing particular words and concepts can affect the body in the same way that they do on the mind. Proof of this can be seen in a study where individuals were asked to walk more slowly than normal after being primed with phrases like "wrinkle" and "Florida," which are often linked with aging. Surprisingly, we prime our thoughts and actions subconsciously; we don't even realize it.
Priming demonstrates that our decisions, judgments, and actions are not always under our conscious control, contrary to what many claim. Rather, we are continually primed by certain cultural and social factors.
For instance, studies conducted by Kathleen Vohs demonstrate that monetary incentives stimulate individualistic behavior. Individuals who are exposed to visual representations of money, for instance, tend to behave more autonomously and exhibit less propensity to engage with, rely on, or comply with the requests of others.
Living in a world full of excellent money triggers could move human behavior away from altruism, according to Vohs's findings. Priming is simply one of many social factors that can impact people's beliefs, which in turn affects their decisions, judgments, and actions, all of which have repercussions for our culture and the society in which we all reside.
Key 3: Snap judgments are mental decisions made without enough information
Picture this: you're at a party and meet a guy named Ben. You hit it off right away. It turns out that later on, someone wants to know whether you know anyone who would be interested in donating to their cause. Ben comes to mind, even though all you know about him is that he is affable.
That is to say, you took your positive impression of Ben's character trait and extrapolated it to his whole personality. We tend to have strong opinions about others even when we don't fully understand them.
When we don't have all the facts, our minds have a habit of simplifying things too much, which can lead to poor decisions. The halo effect, or excessive emotional coherence, describes what's happening here:
you develop a favorable impression of Ben because of his friendliness, and as a result, you start to think highly of him despite your lack of background knowledge.
This is only one example of how our brains cut corners when deciding between alternatives.
People also tend to agree with the information that supports their previously held opinions and to accept suggestions of information without question, a phenomenon known as confirmation bias.
By inquiring, "Is James friendly?" we can demonstrate this. When presented with this question alone, without any more evidence, our minds tend to corroborate the offered assumption, leading us to believe that James is friendly.
Our minds are ready to make hasty judgments, which can lead to the halo effect and confirmation bias. On the other hand, we don't always have sufficient information to make a precise decision, hence this frequently results in errors.
Our minds tend to make assumptions and oversimplify things when we don't have all the information we need, which can lead us to draw the wrong conclusions.
Similar to priming, these mental processes influence our decisions, evaluations, and behaviors even when we aren't consciously aware of them.
Key 4: Heuristics are mental processes that help us make snap judgments
We need to be able to make snap decisions all the time. Our brains have evolved little tricks to assist us grasp our environments quickly so that we can accomplish this. Heuristics are the name given to these.
The problem is that our brains tend to abuse these processes, even though they are usually rather useful. When we try to use them in contexts where they don't belong, we run the risk of making blunders.
Two of the numerous kinds of heuristics—the substitution heuristic and the availability heuristic—can help us grasp what they are and the kinds of errors they might cause.
In the substitution heuristic, we provide a simpler response than the original question. "That woman is a candidate for sheriff," would be an example of such a query. In what ways will her term as president be fruitful?" "Does this woman appear to be someone who would make an excellent sheriff?"
is a simple way to sidestep the difficult issue we should be answering. By using this heuristic, we skip over investigating the candidate's record and policies and jump to the considerably easier conclusion of whether or not this lady embodies our ideal of an effective sheriff.
Even though the lady has much experience combatting crime, we may reject her if she doesn't conform to our concept of a sheriff. The availability heuristic comes next; it's when you give more weight to something you hear frequently or that you find easy to recall.
Take strokes as an example. Even though accidents account for a far smaller percentage of fatalities, research indicated that 80% of participants still thought that an accidental death was more probable.
This is because news reports of accidental fatalities tend to take more notice and leave a more lasting impression on us. Tragic accidental deaths tend to stick in our minds more easily than deaths caused by strokes, which can lead us to respond improperly when faced with these risks.
Key 5: Because we're bad at numbers, we make casual mistakes and have problems understanding statistics
If you want to know if something will happen, how do you do it? Remembering the base rate is one good strategy. This is a foundational statistic upon which other statistical methods are built.
Consider a major taxi firm that operates with 80% red cabs and 20% yellow cabs. This indicates that yellow taxi cabs are subject to a base rate of 20% and red cabs to a base rate of 80%. Just keep in mind the base pricing the next time you need to order a cab and are curious about the hue.
So, while making a prediction, we should keep the base rate in mind at all times, but alas, this is seldom the case.
Base-rate neglect is quite prevalent. Our tendency to focus on expectations rather than likelihood is one explanation for why we tend to overlook the base rate. Consider those taxis once more: Witnessing five red cabs go past can make you think the following one will be yellow instead.
But if we recall the base rate, we should be able to see that the odds of the following cab being red remain around 80% regardless of the number of cabs of either hue that pass by. Unfortunately, our expectations lead us astray, and we usually end up mistaking that yellow cab for anything else.
One typical error in dealing with statistics is ignoring the base rate. Remembering that all data eventually reverts to the mean is another challenge. In other words, it's a recognition that everything has an average and that deviations from that average tend to converge.
Consider a football striker whose coach would be overjoyed if she scored ten goals in September instead of her usual five goals per month. However, if she continues to score about five goals per month throughout the year, her coach is likely to criticize her for not capitalizing on her "hot streak."
However, the striker is merely regressing to her mean, thus she does not deserve any criticism.
Key 6: Why our memories are more influenced by hindsight than first-hand experience (the "past imperfect")
There is no simple method for our thoughts to recall past events. Our two distinct mental processes, our "memory selves," each recall past events in their unique way. The experiencing self is the first and foremost since it keeps track of our feelings at any given time.
What does it feel like right now?
After the fact, there's the remembering self, which keeps track of how everything happened. The question is, "Overall, how was it?"
The feeling we get when experiencing anything is the most reliable indicator of how things were, therefore listening to our experiencing self provides a more truthful picture of what happened.
However, our dominant memory is the remembering self, which is less reliable since it records memories after the fact. The dominance of the remembering self over the experiencing self can be explained by two factors.
The first is duration neglect, which occurs when we focus on a specific recollection from an event while ignoring the event's overall time. Second, there's the peak-end rule, which states that we should give more weight to the last part of an event. Take this study that tested participants' recollection of a traumatic colonoscopy as an illustration of the power of the remembering self.
Those patients who had to go through the longer procedure probably weren't happy about it because they had to deal with the agony for a longer period. They felt this way when it happened.
Those who underwent the lengthier operations reported more discomfort, as expected from the patients' first-hand accounts of the process. On the other hand, when the remembering self took control after the event, the worst feelings came from those who had the shorter procedure with the more painful ending.
Our flawed memories, the peak-end rule, and duration neglect are all on full display in this survey.
Key 7: How changing our mental focus affects our behaviors and perceptions
Various mental processes require varying quantities of mental energy. We have cognitive ease when we don't have to exert much effort or focus our attention. However, mental exertion and energy consumption increase when attention mobilization is required.
These shifts in brain energy levels significantly impact our actions. When we're mentally relaxed, our intuitive System 1 takes over, and our more energy-intensive and rational System 2 takes a back seat.
This makes us more receptive to ideas, imaginative, and joyful, but also more prone to making mistakes. Because our awareness is at a peak while we're under cognitive strain, System 2 takes over.
Although we are significantly less imaginative, we will make fewer mistakes since System 2 is more prepared to double-check our judgments than System 1.
To put yourself in the optimal mental state for specific activities, you may control how much mental energy your brain requires.
An example of this would be to advocate for cognitive ease to make a message more compelling. Exposing oneself to repetitious information is one approach to this.
Repetition or other methods of making information stick in our minds increase its persuasive power. This is because our brains have developed a positive response to consistent, straightforward instructions.
A level of cognitive ease is achieved when we perceive something familiar. However, when we're under mental pressure, we're better able to solve difficulties like statistical ones.
This condition can be brought on by being exposed to information that is presented in a confusing manner, such as by reading text that is hard to read. When we put in the mental work to understand the situation, our energy levels rise and we are less prone to give up easily.
Key 8: Gambling: our perception of risk is influenced by the presentation of probabilities
The way ideas are conveyed to us greatly influences our evaluation of them and our approach to solving problems. Modifying a phrase or question little can change our approach to it significantly.
The way we evaluate danger is a prime illustration of this. One could assume that once the likelihood of a risk is known, everyone will act accordingly.
Unfortunately, that's not true. Changing the form of the graphic can alter our approach to even the most meticulously computed probability. For instance, when presented with a rare event's relative frequency instead of its statistical likelihood, individuals are more likely to perceive it as occurring.
Psychiatrists from two different groups were asked in the "Mr. Jones experiment" to rate the level of safety associated with releasing Mr. Jones from the mental institution.
"Of every 100 patients similar to Mr. Jones, 10 are estimated to commit an act of violence," the second group was informed, whereas the first group was informed that patients like Mr. Jones had a "10 percent probability of committing an act of violence."
His discharge was denied by nearly twice as many respondents in the second group as in the first. Denominator neglect is another way that we lose sight of what matters statistically.
This happens when our decisions are influenced by vivid mental imagery rather than straightforward numbers. Comparing the following two claims: "This drug protects children from disease X but has a 0.001 percent chance of permanent disfigurement" and "One of 100,000 children who take this drug will be permanently disfigured."
Both statements are equally true, but the second one conjures up images of a deformed child and has a far greater impact, which is why we would be less inclined to provide the medicine.
Key 9: Why humans, unlike robots, do not make decisions based only on logic
As individuals, how do we arrive at decisions? We should base our decisions entirely on rational argument, according to a prominent and powerful group of economists who held this view for quite some time.
According to their reasoning, everyone follows the rules laid out by utility theory when making decisions. This theory posits that people take into account all relevant factors and select the course of action that will benefit them the greatest in the long run.
According to utility theory, for instance, one would prefer a 10% chance of getting an orange over a 10% chance of winning a kiwi if the former were more appealing. It isn't hard to see, is it? The Chicago School of Economics and its most illustrious member, Milton Friedman, were the preeminent scholars in this area of economics.
According to the Chicago School's utility theory—which was subsequently dubbed "Econs" by economist Richard Thaler and lawyer Cass Sunstein—market participants make incredibly intelligent decisions.
Everyone follows the same set of rules as the other Econs; they all value things according to their logical requirements. Additionally, Econs also place a logical value on their riches, considering solely the usefulness they offer them. Here we have John and Jenny, two individuals with $5 million in their pockets.
They should both be equally content with their financial situations since, according to utility theory, their wealth is equal. Why don't we add some complexity, though? Despite having quite different beginnings, let's pretend that their $5 million riches are the product of a day spent gambling:
John quadrupled his initial investment of $1 million, whereas Jenny saw her initial investment of $9 million reduce to $5 million.
After receiving $5 million, do you still believe John and Jenny are content? Sounds unlikely. So, it's clear that utility isn't the only factor in how we assign values to objects. We can make bizarre and illogical choices, as we'll see in the next insights because not everyone views utility logically according to utility theory.
Key 10: Why we let our emotions influence our decisionmaking rather than relying only on logic: gut feeling
What works instead of utility theory?
Prospect theory, which the author himself devised, is one such possibility. We don't necessarily make the most logical decisions, according to Kahneman's prospect theory, which contradicts utility theory.
Take a look at these two examples: First, you have $1,000 to work with, and then you have to decide whether you want a guaranteed $500 or a 50% chance of winning another $1,000. In the second case, you have $2,000 to play with and must decide whether to risk losing $500 for certainty or $1,000 for half the odds.
If our decision-making process was completely rational, we would pick the same option in any scenario. This, however, is not the case. In the first scenario, the majority opts for the sure bet, whereas in the second, they take a chance.
This can be better understood with the aid of prospect theory. It brings to light two main reasons why our actions aren't always logical. The fact that we are more afraid of losing than winning is a common theme in both.
First, we assign values to things according to where they are about other objects. We adjust our willingness to gamble based on whether we start with $1,000 or $2,000 in the two scenarios.
This is because the beginning point influences the valuation of our position. It feels like a triumph in the first scenario to wind up at $1,500, but a terrible loss in the second scenario because the reference points are $1,000 and $2,000, respectively.
Aside from the objective value at the time, our starting position is just as important in understanding value, even though our reasoning here is irrational. Second, the declining sensitivity principle affects us, which means that the value we assign to something cannot always correspond to its true worth. Even if the two losses are equivalent in monetary worth, falling from $1,000 to $900 doesn't hurt quite as much as going from $200 to $100.
Going from $1,500 to $1,000 in our case has a bigger perceived value loss than going from $2,000 to $1,500.
Key 11: The mind generates complex mental models to understand the world, which might lead to errors
Cognitive coherence is an innate mental process that helps us make sense of the world; it allows us to see ideas and thoughts in their whole. When it comes to the weather, for instance, our brains have a lot of pictures.
When we think about summer weather, for example, we can visualize the sun shining down on us and making us feel quite hot.
Visuals not only aid in comprehension, but they also play a significant role in decision-making. We use these visuals as a foundation for our assumptions and judgments while making decisions.
When deciding what to dress in the summer, for instance, our mental picture of the weather that season has a big role.
Our over-reliance on these visual representations is the root of the problem. We continue to follow our intuitions and preconceptions even when evidence from reality contradicts them.
Even if the weatherman says it will be mild this summer, you might still decide to wear shorts and a T-shirt because that's what you see yourself wearing when you think of summer.
Then you can find yourself trembling in the cold. In a nutshell, we tend to be extremely self-assured in our frequently inaccurate mental representations. However, one can learn to control their arrogance and begin producing more accurate forecasts.
Using reference class forecasting is one approach to avoiding errors. Make a more informed prediction by looking at concrete examples from the past rather than relying on your vague mental pictures. Consider a time when you ventured out into the cold on a summer day. What were you wearing back then?
Also, you can prepare for both the success and failure of your forecasts by creating a long-term risk policy.
If you take the necessary precautions, you can create better-informed predictions based on evidence rather than vague mental images. Depending on the forecast, this can imply packing an extra layer of clothing, such as a sweater, just in case.
FINAL SUMMARY
The book "Thinking, Fast and Slow" explores the two systems in our minds: one instinctive and effortless, and the other deliberate and demanding of our attention. Here are some actionable takeaways from the book:
Repeat the message: Messages become more persuasive when they are repeatedly exposed to us. Our minds have evolved to associate repeated exposure with safety and reliability. Be cautious of rare statistical events overreported in the media:
Disasters and other rare events are often overestimated in probability due to the vivid imagery associated with them in the media. Don't let these events overly influence your perceptions or decisions.
Mood affects creativity and intuition: When in a positive mood, the analytical part of our mind relaxes, allowing the more intuitive and creative system to take over. Being in a better mood can enhance your creativity and problem-solving abilities.
By incorporating these insights, you can enhance the effectiveness of persuasive messages, be aware of statistical biases, and leverage your mood to boost creativity and intuition.