Thinking, Fast and Slow by Daniel Kahneman

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About Daniel Kahneman

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Thinking, Fast and Slow

» Daniel Kahneman

Penguin
Paperback : 10 May 2012

£8.99

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Synopsis

The New York Times Bestseller, acclaimed by author such as Freakonomics co- author Steven D. Levitt, Black Swan author Nassim Nicholas Taleb and Nudge co- author Richard Thaler, Thinking Fast and Slow offers a whole new look at the way our minds work, and how we make decisions.

Why is there more chance we'll believe something if it's in a bold type face?
Why are judges more likely to deny parole before lunch?
Why do we assume a good-looking person will be more competent?

The answer lies in the two ways we make choices: fast, intuitive thinking, and slow, rational thinking. This book reveals how our minds are tripped up by error and prejudice (even when we think we are being logical), and gives you practical techniques for slower, smarter thinking. It will enable to you make better decisions at work, at home, and in everything you do.

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Critic Review:

'Daniel Kahneman is among the most influential psychologists in history and certainly the most important psychologist alive today. He has a gift for uncovering remarkable features of the human mind, many of which have become textbook classics and part of the conventional wisdom. His work has reshaped social psychology, cognitive science, the study of reason and of happiness, and behavioral economics, a field that he and his collaborator Amos Tversky invented. The appearance of Thinking, Fast and Slow is a major event,' Steven Pinker, author of The Better Angels of our Nature

'This is a landmark book in social thought, in the same league as The Wealth of Nations by Adam Smith and The Interpretation of Dreams by Sigmund Freud,' Nassim Nicholas Taleb, author of The Black Swan

'There have been many good books on human rationality and irrationality, but only one masterpiece. That masterpiece is Daniel Kahneman's Thinking, Fast and Slow.Kahneman, a winner of the Nobel Prize for economics, distils a lifetime of research into an encyclopedic coverage of both the surprising miracles and the equally surprising mistakes of our conscious and unconscious thinking. He achieves an even greater miracle by weaving his insights into an engaging narrative that is compulsively readable from beginning to end. My main problem in doing this review was preventing family members and friends from stealing my copy of the book to read it for themselves...this is one of the greatest and most engaging collections of insights into the human mind I have read,' William Easterly Financial Times

'Daniel Kahneman is one of the most original and interesting thinkers of our time. There may be no other person on the planet who better understands how and why we make the choices we make. In this absolutely amazing book, he shares a lifetime's worth of wisdom presented in a manner that is simple and engaging, but nonetheless stunningly profound. This book is a must read for anyone with a curious mind,' Steven D. Levitt, co-author of Freakonomics

'Absorbing, intriguing...By making us aware of our minds' tricks, Kahneman hopes to inspire individuals and organisations to identify strategies to outwit them,' Jenni Russell, Sunday Times

'This book is a tour de force by an intellectual giant; it is readable, wise, and deep. Buy it fast. Read it slowly and repeatedly. It will change the way you think, on the job, about the world, and in your own life,' Richard Thaler, co-author of Nudge

'Thinking, Fast and Slow is a masterpiece - a brilliant and engaging intellectual saga by one of the greatest psychologists and deepest thinkers of our time. Kahneman should be parking a Pulitzer next to his Nobel Prize,' Daniel Gilbert, Professor Of Psychology, Harvard University, author of Stumbling On Happiness, host of This Emotional Life

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REGRET

Regret is an emotion, and it is also a punishment that we administer to ourselves. The fear of regret is a factor in many of the decisions that people make (“Don’t do this, you will regret it” is a common warning), and the actual experience of regret is familiar. The emotional state has been well described by two Dutch psychologists, who noted that regret is “accompanied by feelings that one should have known better, by a sinking feeling, by thoughts about the mistake one has made and the opportunities lost, by a tendency to kick oneself and to correct one’s mistake, and by wanting to undo the event and to get a second chance.” Intense regret is what you experience when you can most easily imagine yourself doing something other than what you did.

Regret is one of the counterfactual emotions that are triggered by the availability of alternatives to reality. After every plane crash there are special stories about passengers who “should not” have been on the plane— they got a seat at the last moment, they were transferred from another airline, they were supposed to fl y a day earlier but had had to postpone. The common feature of these poignant stories is that they involve unusual events— and unusual events are easier than normal events to undo in imagination. Associative memory contains a representation of the normal world and its rules. An abnormal event attracts attention, and it also activates the idea of the event that would have been normal under the same circumstances. To appreciate the link of regret to normality, consider the following scenario:

Mr. Brown almost never picks up hitchhikers. Yesterday he gave a man a ride and was robbed.

Mr. Smith frequently picks up hitchhikers. Yesterday he gave a man a ride and was robbed.

Who of the two will experience greater regret over the episode?

The results are not surprising: 88% of respondents said Mr. Brown, 12% said Mr. Smith.
Regret is not the same as blame. Other participants were asked this question about the same incident:

Who will be criticized most severely by others?

The results: Mr. Brown 23%, Mr. Smith 77%. Regret and blame are both evoked by a comparison to a norm, but the relevant norms are different. The emotions experienced by Mr. Brown and Mr. Smith are dominated by what they usually do about hitchhikers.

EXAGGERATED EMOTIONAL COHERENCE (HALO EFFECT)

If you like the president’s politics, you probably like his voice and his appearance as well. The tendency to like (or dislike) everything about a person— including things you have not observed— is known as the halo effect. The term has been in use in psychology for a century, but it has not come into wide use in everyday language. This is a pity, because the halo effect is a good name for a common bias that plays a large role in shaping our view of people and situations. It is one of the ways the representation of the world that System 1 generates is simpler and more coherent than the real thing. You meet a woman named Joan at a party and find her personable and easy to talk to. Now her name comes up as someone who could be asked to contribute to a charity. What do you know about Joan’s generosity? The correct answer is that you know virtually nothing, because there is little reason to believe that people who are agreeable in social situations are also generous contributors to charities. But you like Joan and you will retrieve the feeling of liking her when you think of her. You also like generosity and generous people. By association, you are now predisposed to believe that Joan is generous. And now that you believe she is generous, you probably like Joan even better than you did earlier, because you have added generosity to her pleasant attributes.

Real evidence of generosity is missing in the story of Joan, and the gap is filled by a guess that fits one’s emotional response to her.

ANCHORING

Amos and I once rigged a wheel of fortune. It was marked from 0 to 100, but we had it built so that it would stop only at 10 or 65. We recruited students of the University of Oregon as participants in our experiment. One of us would stand in front of a small group, spin the wheel, and ask them to write down the number on which the wheel stopped, which of course was either 10 or 65. We then asked them two questions:

Is the percentage of African nations among UN members larger or smaller than the number you just wrote?

What is your best guess of the percentage of African nations in the UN?

The spin of a wheel of fortune— even one that is not rigged— cannot possibly yield useful information about anything, and the participants in our experiment should simply have ignored it. But they did not ignore it. The average estimates of those who saw 10 and 65 were 25% and 45%, respectively. The phenomenon we were studying is so common and so important in the everyday world that you should know its name: it is an anchoring effect. It occurs when people consider a particular value for an unknown quantity before estimating that quantity. What happens is one of the most reliable and robust results of experimental psychology: the estimates stay close to the number that people considered— hence the image of an anchor. If you are asked whether Gandhi was more than 114 years old when he died you will end up with a much higher estimate of his age at death than you would if the anchoring question referred to death at 35. If you consider how much you should pay for a house, you will be influenced by the asking price. The same house will appear more valuable if its listing price is high than if it is low, even if you are determined to resist the influence of this number; and so on— the list of anchoring effects is endless. Any number that you are asked to consider as a possible solution to an estimation problem will induce an anchoring effect.