Thinking Fast And Slow -
Daniel Khaneman

How Good Judgement Leads To Better Decisions



Thinking Fast and Slow - Overview

"Thinking Fast and Slow" is the book by Daniel Kahneman, winner of the Nobel Memorial Prize in Economics, in which he presents decades of research to help us understand what really goes on inside our heads when we are making decisions.

There are two systems in your brain which are constantly in conflict for control of your behaviour and actions.

The book sets out the many ways the result of this conflict leads to mistakes and errors in your memory, your assessment of situations and your decision making processes and offers practical solutions as to what you can do about it.



    System 1 Thinking = impulsive, automatic, and intuitive

    Characteristics:

    • Fast and impulsive
    • Unconscious, automatic and effortless
    • Uses heuristics and is susceptible to congnitive biases and distortions
    • No self-awareness or control
    • Function is to assess the situation and provide updates
    • System 1 Thinking accounts for 98% of all your thinking





    System 2 Thinking = thoughtful, deliberate, and calculating

    Characteristics:

    • Slow
    • Deliberate and conscious, requires effort, is a controlled mental process of rational thinking, ideally with applied thinking skills
    • Has self-awareness and control. is logical and skeptical as it [ideally] applies a range of thinking skills
    • Function is to seek new and missing information, make connections, interpret, evaluate and make decisions
    • System 2 Thinking accounts for 2% of all your thinkin



Professor William Irvine Explains Evolutionary Psychology and Thinking Systems In Our Brain








Daniel Kahneman Explains Systems 1 and 2 in "Thinking Fast and Slow"

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Daniel Kahneman - Putting Your Intuition on Ice

In Shane Parrish's Knowledge Project episode 68 he has Daniel Kahneman as his guest and Kahneman reveals the actions we can take to overcome the biases that cripple our decision-making and limit our effectiveness. You can download the podcast or read the summary reproduced below.

"We talk about the factors that contribute to happiness and life satisfaction, procedures to improve our decision-making, what, if anything, can be done to overcome our cognitive biases, why changing behavior is so difficult and much more. Here are a few highlights from our conversation:"



    Daniel Khaneman:

    "I think changing behavior is extremely difficult. There are a few tips and a few guidelines about how to do that, but anybody who’s very optimistic about changing behavior is just deluded. It’s hard to change other people’s behavior. It’s very hard to change your own. Not simple.

    I’d like people to know that motivation is complex, and that people do good things for a mixture of good and bad reasons; and they do bad things for a mixture of good and bad reasons. I think that there is a point to educating people in psychology. It’s to make them less judgmental. Just have more empathy and more patience. Being judgmental doesn’t get you anywhere.

    What gets in the way of clear thinking is that we have intuitive views of almost everything. So as soon as you present a problem to me, I have some ready made answer. What gets in the way of clear thinking are those ready made answers, and we can’t help but have them.

    We have beliefs because mostly we believe in some people, and we trust them. We adopt their beliefs. We don’t reach our beliefs by clear thinking, unless you’re a scientist or doing something like that. There’s a fair amount of emotion when you’re a scientist as well that gets in the way of clear thinking. Commitments to your previous views, being insulted that somebody thinks he’s smarter than you are. I mean lots of things get in the way, even when you’re a scientist. So I’d say there is less clear thinking than people like to think.

    Very quickly you form an impression, and then you spend most of your time confirming it instead of collecting evidence.

    Negotiations is not about trying to convince the other guy. It’s about trying to understand them. So again, it’s slowing yourself down. It’s not doing what comes naturally because trying to convince them is applying pressure. Arguments, promises, and threats are always applying pressure. What you really want is to understand what you can do to make it easy for them to move your way. Very non-intuitive. That’s a surprising thing when you teach negotiation. It’s not obvious. We are taught to apply pressure and socialize that way.

    Independence is the key because otherwise when you don’t take those precautions, it’s like having a bunch of witnesses to some crime and allowing those witnesses to talk to each other. They’re going to be less valuable if you’re interested in the truth than keeping them rigidly separate, and collecting what they have to say."

    [Daniel Kahneman: Putting Your Intuition on Ice [Knowledge Project episode 68]]







How To Apply The Insights Of Thinking Fast and Slow?

The scope and purpose of this article is not to provide a book review, or an in-depth analysis of what is a large and complex book.

Our focus is on the core theme of fast and slow thinking: how to exercise good judgement and  make good decisions - as this in complete alignment with the key themes of this site.



    EXERCISING JUDGEMENT & GOOD DECISION MAKING

    Key Point:

    Understand and know how to avoid:

    [1] Cognitive Distortions - the psychology of human misjudgement; and how to apply

    [2] Mental Models.

    Specifics:

    1. The first and most obvious point is to understand and be fully aware of these cognitive biases and cognitive distortions.
    2. Understand the power and pitfalls of Heuristics i.e. the mental short cuts that we all use all the time in everyday decisions.
    3. Understand the forces at play, especially the boundary between knowing what you do know and what you don't know. Understand your Circle Of Competence.
    4. When making important and significant decisions, invest the time to apply good Thinking Skills to the whole decision making process.
    5. Pay particular attention to First Principles Thinking and Second Order Thinking
    6. Understand and apply Mental Models



Here is how it all hangs together:

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