Thinking, fast and slow – Daniel Kahneman book summary
Contents
Introduction.......................................................................................................................................6
Part 1 – Two systems.............................................................................................................................7
Chapter 1 – the characters of the story.............................................................................................7
Chapter 2 – Attention and effort........................................................................................................7
Chapter 3 – The lazy controller..........................................................................................................8
The busy and depleted System 2...................................................................................................8
The lazy System 2...........................................................................................................................8
Intelligence, control, rationality.....................................................................................................8
Chapter 4 - The associative machine.................................................................................................9
The marvels of priming..................................................................................................................9
Primes that guide us......................................................................................................................9
Chapter 5 – Cognitive ease..............................................................................................................10
Illusions of remembering.............................................................................................................10
Illusions of truth...........................................................................................................................10
How to write a persuasive message.............................................................................................10
Strain and effort...........................................................................................................................11
The pleasure of cognitive ease.....................................................................................................11
Ease, mood and intuition.............................................................................................................11
Chapter 6 – Norms, surprises and causes........................................................................................11
Assessing normality.....................................................................................................................11
Seeing causes and intentions.......................................................................................................12
Chapter 7 – A machine for jumping to conclusions.........................................................................12
Neglect of ambiguity and suppression of doubt..........................................................................12
A bias to believe and confirm......................................................................................................12
Exaggerated emotional coherence (Halo effect)..........................................................................12
What you see is all there is (WYSIATI)..........................................................................................13
Chapter 8 – How judgments happen...............................................................................................13
Basic assessments........................................................................................................................14
Sets and prototypes.....................................................................................................................14
Intensity matching.......................................................................................................................14
The mental shotgun.....................................................................................................................14
Chapter 9 – Answering an easier question......................................................................................14
Substituting questions.................................................................................................................14
, The 3-D heuristic..........................................................................................................................15
The mood heuristic for happiness................................................................................................15
The affect heuristic......................................................................................................................15
Part 2 – Heuristics and biases..............................................................................................................16
Chapter 10 – The law of small numbers...........................................................................................16
The law of small numbers............................................................................................................16
A bias of confidence over doubt..................................................................................................16
Cause and chance........................................................................................................................16
Chapter 11 – Anchors......................................................................................................................17
Anchoring as adjustment.............................................................................................................17
Anchoring as a priming effect......................................................................................................17
The anchoring index.....................................................................................................................17
Uses and abuses of anchors.........................................................................................................18
Anchoring and the two systems...................................................................................................18
Chapter 12 – The science of availability...........................................................................................18
The psychology of availability......................................................................................................19
Chapter 13 – Availability, emotion and risk.....................................................................................19
Availability and affect..................................................................................................................19
The public and the experts..........................................................................................................19
Chapter 14 - Tom W’s specialty.......................................................................................................20
Predicting by representativeness.................................................................................................20
The sins of representativeness....................................................................................................20
How to discipline intuition...........................................................................................................21
Chapter 15 - Linda: less is more.......................................................................................................21
Less is more, sometimes even in joint evaluation........................................................................22
Chapter 16 – Causes trump statistics...............................................................................................22
Causal stereotypes.......................................................................................................................22
Causal situations..........................................................................................................................22
Can psychology be taught?..........................................................................................................23
Chapter 17 – Regression to the mean..............................................................................................23
Talent and luck.............................................................................................................................23
Understanding regression............................................................................................................23
Chapter 18 – Taming intuitive predictions.......................................................................................24
Nonregressive intuitions..............................................................................................................24
A correction for intuitive predictions...........................................................................................24
A defense of extreme predictions?..............................................................................................24
, A two-systems view of regression................................................................................................25
Part 3 – Overconfidence......................................................................................................................26
Chapter 19 – The illusion of understanding.....................................................................................26
The social costs of hindsight........................................................................................................26
Recipes for success......................................................................................................................26
Chapter 20 – The illusion of validity.................................................................................................27
The illusion of validity..................................................................................................................27
The illusion of stock-picking skill..................................................................................................27
What supports the illusion of skill and validity?...........................................................................27
The illusions of pundits................................................................................................................27
It is not the experts’ fault – the world is difficult.........................................................................28
Chapter 21 – Intuitions versus formulas..........................................................................................28
The hostility to algorithms...........................................................................................................28
Learning from Meehl...................................................................................................................28
Do it yourself...............................................................................................................................29
Chapter 22 – Expert intuition: when can we trust it........................................................................29
Marvels and flaws........................................................................................................................29
Intuition as recognition................................................................................................................29
Acquiring skill...............................................................................................................................29
The environment of skill..............................................................................................................29
Feedback and practice.................................................................................................................30
Evaluating validity........................................................................................................................30
Chapter 23 – Skipped (not discussed in this course)........................................................................30
Chapter 24 – The engine of capitalism.............................................................................................30
Optimists......................................................................................................................................30
Entrepreneurial delusions............................................................................................................31
Competition neglect....................................................................................................................31
Overconfidence............................................................................................................................31
The premortem: a partial remedy................................................................................................31
Part 4 – Choices...................................................................................................................................33
Chapter 25 – Bernoulli’s errors........................................................................................................33
Bernouilli’s error..........................................................................................................................33
Chapter 26 – Prospect theory..........................................................................................................33
Loss aversion................................................................................................................................34
Blind spots of prospect theory.....................................................................................................34
Chapter 27 – The endowment effect...............................................................................................34
, The endowment effect.................................................................................................................35
Thinking like a trader...................................................................................................................35
Chapter 28 – Bad events..................................................................................................................35
Goals are reference points...........................................................................................................35
Defending the status quo.............................................................................................................35
Loss aversion in the law...............................................................................................................36
Chapter 29 – The fourfold pattern...................................................................................................36
Changing chances........................................................................................................................36
Allais’s paradox............................................................................................................................37
Decision weights..........................................................................................................................37
The fourfold pattern....................................................................................................................37
Gambling in the shadow of the law.............................................................................................37
Chapter 30 – Rare events.................................................................................................................37
Overestimation and overweighting.............................................................................................38
Vivid outcomes............................................................................................................................38
Vivid probabilities........................................................................................................................39
Decisions from global impressions...............................................................................................39
Chapter 31 – Risk policies................................................................................................................39
Broad or narrow?.........................................................................................................................39
Samuelson’s problem..................................................................................................................40
Risk policies..................................................................................................................................40
Chapter 32 – Keeping score.............................................................................................................40
Mental accounts..........................................................................................................................40
Regret..........................................................................................................................................41
Responsibility...............................................................................................................................41
Chapter 33 – Reversals....................................................................................................................41
Challenging economics................................................................................................................41
Categories....................................................................................................................................41
Unjust reversals...........................................................................................................................42
Chapter 34 – Frames and reality......................................................................................................42
Emotional framing.......................................................................................................................42
Empty intuitions...........................................................................................................................42
Good frames................................................................................................................................42
Part 5 – Two selves..............................................................................................................................44
Chapter 35 – Two selves..................................................................................................................44
Experienced utility.......................................................................................................................44
, Experience and memory..............................................................................................................44
Which self should count?.............................................................................................................44
Biology vs. rationality...................................................................................................................45
Chapter 36 – Life as a story..............................................................................................................45
Amnesic vacations.......................................................................................................................45
Chapter 37 – Experienced well-being..............................................................................................45
Experienced well-being................................................................................................................46
Chapter 38 – Thinking about life..................................................................................................46
The focusing illusion....................................................................................................................47
Time and time again....................................................................................................................47
,Introduction
People make systematic errors in their decision-making. They are influenced by biases of intuition.
People are often making choices unconsciously, which mostly is a good thing, but it also leads to
errors. The goal of this book is to provide better understanding of the biases of intuition.
While Kahneman worked together with his colleague, they stumbled upon many heuristics (“rules of
thumb”) in judging and decision-making. They challenged the theory that human decision-making is
based on rationality, but instead relies on biases and heuristics. However, with enough expertise,
intuitions can become accurate due to recognitions of situations. Later, Kahneman also conducted
research on decision-making with uncertainties.
In this book, decision-making is explained with the use of two systems:
- System 1: fast thinking
o Effortless, based on intuitions and heuristics, unconscious
- System 2: slow thinking
o Takes effort and time, based on rational thinking, conscious
Build-up of the book:
- Part 1: explanation of the systems, their workings, and their differences
- Part 2: focus on judgment heuristics, and looking at the question why people are so bad at
intuitive statistics
- Part 3: limitations of the mind by overestimating our understanding and underestimating the
role of chance
- Part 4: economics and decision-making
- Part 5: experiencing self vs remembering self
- Final chapter: conclusions based on the different parts as discussed
,Part 1 – Two systems
Chapter 1 – the characters of the story
System 1:
- Works automatically and quickly
- Takes little to no effort
- Happens unconsciously (uncontrolled)
- Innate capabilities; recognition, attention guiding, loss avoidance, perception
System 2:
- Needs attention to work
- Demands time and effort
- Happens consciously, awareness of concentration and choice
- Rational thinking, learned through practice
We feel as if we are mostly guided by System 2, while actually System 1 governs most often, and
guides System 2. In some cases, System 2 can overrule System 1. In this case, System 2 takes over a
task of System 1 consciously, while the task usually runs automatically. The task then demands
attention to be carried out. Attention is only needed by System 2, and is a limited resource. People
can multitask, but only if all task do not demand a lot of attention. When a task demands intense
attention, people become temporarily blind to all other stimuli; this is the phenomenon of
inattentional blindness.
The division between the systems leads to an optimal balance between optimizing performance and
minimizing effort. System 1 is mostly effective, but relies on heuristics which can lead to biases and
systematic errors. System 1 cannot be stopped, but it can be overruled by System 2 in demanding
situations. System 2 can overcome the impulses of System 1; it is in charge of self-control. A conflict
between the systems arises when System 2 has to overrule an automatic response of System 1,
which takes effort.
Illusions are guided by System 1: they perceive something incorrectly. When knowing how an illusion
works, System 2 knows the truth about the illusion. However, one will keep perceiving the illusion,
as System 1 cannot be turned off, even though knowing better.
It is impossible to prevent all biases and systematic errors, as System 2 can only overrule when
knowing the possible error of System 1, and when paying attention. It is impossible to do this all the
time. Therefore, one has to make a tradeoff, and can prevent part of the mistakes by recognizing
situations in which they take place, and taking the effort to overrule them.
The two systems are not actual separate mechanisms; they are not really completely separate
systems, and do not have separate areas of the brain working for them. They are fictitious characters
for the difference between automatic and effortful thinking, and are used to create a better
understanding of the differences.
Chapter 2 – Attention and effort
System 2 performs as least as possible. Whenever it acts, it is usually guided by System 1. However,
when effort and self-control is needed to overcome the impulses and intuitions of System 1, System
2 has to come into play.
,High effort tasks lead to inattentional blindness and physical arousal: people may miss out on other
stimuli, their pupils dilate and their heartbeats rise. The inattentional blindness can be explained by
the limited capacity of System 2 (working memory): whenever there’s a threat of overload, it gives
priority to the most effortful task and ignores the rest. Demand of attention of a task decreases with
increasing skill in the task. The “law of least effort” emphasizes the laziness of System 2, which will
always search for the easiest, least effortful way to perform a task.
When tasks are too hard for people to complete, they give up and the signs of effort of System 2
disappear: the pupils shrink again.
System 2 is the only one that is able to follow rules, make complex comparisons and make deliberate
decisions. System 1 can only make comparisons that include equality or one feature of difference.
System 2 is also in charge of executive control: it can take on, execute and end tasks that are
unknown to us.
Time pressure and the need for a high level of attention increases effort of tasks.
Chapter 3 – The lazy controller
System 2 can perform tasks at a comfortable speed, where one would not notice the mental effort of
the tasks. When the mental effort of a task is not too high, it can be combined with a physical task.
Whenever any of these two demands more effort, it will become impossible to perform the other at
the same time.
Whenever one performs a task without having to exert self-control to keep doing so, one is in “the
flow”. It is the optimal state of concentration, in which one completely focuses on the task and loses
track of all other things.
The busy and depleted System 2
System 1 has more influence on behavior when System 2 is busy. Deliberate choices are more
difficult when System 2 is required for a mental task, and therefore choices will be more impulsive
and intuitive.
Self-control requires effort and attention, and is reduced by mental tasks, alcoholic drinks and sleep
deprivation. Ego-depletion applies to self-control: whenever one had had to exert much self-control
on a task, it is more difficult to exert self-control on a later task as well. Self-control is necessary to
withstand natural tendencies. Ego depletion is however different from the limited capacity of the
working memory, since it applies to tasks in series; it is not impossible to complete the second task,
but due to a lack of motivation self-control decreases. The effect of ego depletion can be reduced by
eating glucose; the nervous system consumes a lot of blood glucose during effortful cognitive tasks,
and the glucose level can be restored by eating, which increases self-control again.
The lazy System 2
System 2 is lazy which leads to overconfidence in intuitions and minimization of effort. Overriding
the intuitions of System 1 is effortful and often does not happen in real-life reasoning, making people
prone to believe wrong conclusions, and due to this also intuitively believe its supporting arguments.
Thinking rationally requires motivation, which is hard to obtain due to the lazy nature of System 2.
Intelligence, control, rationality
Increased executive control (self-control) shows a strong correlation with increased intelligence.
Increasing this control also leads to an increase in intelligence. According to Stanovich, rationality
and intelligence are separate. Rationality is a part of System 2, which determines how prone people
, are to biases in judgment. For people with a “lazy” System 2, and thus little self-control, their
rationality is decreased.
Chapter 4 - The associative machine
System 1 enables associative activation: when perceiving one concept, it automatically leads to
association with many other concepts. This happens instantly, and cannot to prevented. Thus, a
single concept can lead to evoking of memories and facial expressions and other behaviors as
response to the concept or to the associated concepts.
There occurs an associatively coherent pattern of physical, emotional and cognitive responses; they
are all in line with each other regarding the concept.
The mechanism of ideas leads to the simulation of a response to an actual stimuli, while only being
presented with the concept. This happens in all ways: cognitively, emotionally and physically. Thus,
one reacts similarly to the thought of an event as to the actual event. This happens due to
association. The three principles of association:
- Resemblance
- Continuity in time and place
- Causality
An idea can be of all kinds (verb, noun, adjective, etc.) and is located in a network of ideas, with links
(associations) between them. These associations can be based on causality (poison sick), features
(apple green), or categories (banana fruit). When thinking, the mind automatically goes
through a lot of this associative thinking at the same time, of which only a small part happens
consciously.
The marvels of priming
Note: quite a lot of the conclusions of the research as mentioned in this paragraph have been found
to be incorrect now.
Priming effect: being exposed to a certain idea leads to increased chance of evoking associated ideas
(even if unconsciously).
Florida effect: shows that the priming effect is not restricted to concepts and words. It showed
priming in two ways:
- A set of words can prime an idea
- An idea can prime a behavior ideomotor effect
o Ideomotor effect also works in reverse: performing behaviors that are associated
with an idea prime thoughts of the idea
o Coherent to reciprocal priming effect
All of these priming effects show the associative networks. These priming effects happen without
being conscious of them.
Primes that guide us
Priming can have more extensive effects on our behavior:
- The location or images at an election prime our willingness to vote for a certain goal.
- Priming with money-related ideas leads to individualistic behavior: more self-reliant and
selfish behavior
