Thinking fast and slow

Daniel Kahneman
Penguin Books, 2011

Part I. Two Systems

1. The characters of the story

Useful fictions

pp. 29-30
Why call them System 1 and System 2 rather than the more descriptive "automatic system" and "effortful system"? The reason is simple: "Automatic system" takes longer to say than "System 1" and therefore takes more space in your working memory.

7. A machine for jumping to conclusions

Neglect of ambiguity and suppression of doubt

p. 80
[The word bank associated with river or with money] System 1 generated a likely context of its own. We know that it is System 1 because you are not aware of the choice or of the possibility of another interpretation.

Exaggerated emotional coherence (halo effect)

p. 82
If you like the president's politics, you probably like his voice and his appearance as well.

What you see is all there is (WYSIATI)

p. 85

Part II. Heuristics and biases

10. The law of small numbers

Cause and chance

p. 117
We are far too willing to reject the belief that much of what we see in life is random.

13. Availability, emotion, and risk

The public and the experts

p. 144
Rational or not, fear is painful and debilitating, and policy makers must endeavor to protect the public from fear, not only from real dangers.

16. Causes trump statistics

p. 166
A cab was involved in a hit-and-run accident at night. Two cab companies, the Green and the Blue, operate in the city. You are given the following data: What is the probability that the cab involved in the accident was Blue rather than Green?

This is a standard case of Bayesian inference [...] The correct answer is 41%.

17. Regression to the mean

p. 175

18. Taming intuitive predictions

Understanding regression

p. 181
Highly intelligent women tend to marry men who are less intelligent than they are.

A correction for intuitive predictions

p. 190
Of course there are many factors that would affect one of these outcomes and not the other. Julie could have been pushed to read early by overly ambitious parents, she may have had an unhappy love affair that depressed her college grades, she could have had a skiing accident during adolescence that left her slightly impaired, and do on...

p. 191

[...] if you use childhood achievements to predict grades in college without regressing your predictions towards the mean, you will more often than not be disappointed by the academic outcomes of early readers and happily surprised by the grades of those who learned to read relatively late.

A two-system view of regression

p. 194
Be warned: your intuitions will deliver predictions that are too extreme and you will be inclined to put far too much faith in them.

Part III. Overconfidence

19. The illusion of understanding

p. 201
The core of the illusion is that we believe we understand the past [...]

Recipes for success

p. 204
The sense-making machinery of System 1 makes us see the world as more tidy, simple, predictable, and coherent than it really is.

p. 207

The comparison of firms that have been more or less successful is to a significant extent a comparison between firms that have been more or less lucky.

21. Intuitions vs. formulas

p. 225
Because you have little direct knowledge of what goes in your mind, you will never know that you might have made a different judgment or reached a different decision under very slightly different circumstances.

24. The engine of capitalism

Enterpreneurial delusions

p. 258
[...] the evidence indicates that prestigious press awards to the CEO are costly to stockholders. The author writes, "We find that firms with award-winning CEOs subsequently underperform, in terms both of stock and operating performance. At the same time, CEO compensation increases, CEOs spend more time on activities outside the company, such as writing books and sitting on outside boards, and they are more likely to engage in earnings management."

The premortem: a partial remedy

p. 264
"Imagine that we are one year into the future. We implemented the plan as it now exists. The outcome was a disaster. Please take 5 to 10 minutes to write a brief history of that disaster."

Part IV. Choices

25. Bernouilli's errors

p. 269
Our two disciplines seemed to be studying different species, which the behavioral economist Richard Thaler later dubbed Econs and Humans.

30. Rare events

Vivid probabilities

p. 329
The idea of a denominator neglect helps explain why different ways of communicating risks vary so much in their effects. You read that ”a vaccine that protects children from a fatal disease carries a 0.001% risk of permanent disability.” The risk appears small. Now consider another description of the same risk: ”One of 100,000 vaccinated children will be permanently disabled.” The second statement does something to your mind that the first does not: it calls up the image of an individual child who is permanently disabled by a vaccine; the 99,999 safely vaccinated children have faded into the background.

32. Keeping score

Responsibility

p. 351
As the jurist Cass Sunstein points out, the precautionary principle is costly, and when interpreted strictly it can be paralyzing. He mentions an impressive list of innovations that would not have passed the test, including "airplanes, air conditioning, antibiotics, automobiles, chlorine, the measles vaccine, open-heart surgery, radio, refrigeration, smallpox vaccine, and X-rays."

Part V. Two selves

Conclusions

p. 408
I began this book by introducing two fictitious characters, spent some time discussing two species, and ended with two selves. The two characters were the intuitive System 1, which does the fast thinking, and the effortful and slower System 2, which does the slow thinking, monitors System 1, and maintains control as best it can within its limited resources. The two species were the fictitious Econs, who live in the land of theory, and the Humans, who act in the real world. The two selves are the experiencing self, which does the living, and the remembering self, which keeps score and makes the choices.

Essays
Marc Girod
Sun May 26 21:50:24 2019