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Thinking Fast and Slow

Daniel Kahneman, 2011.

The Two Systems

The Character of the Story

Causal thinking vs Statistical reasoning

Attention and Effort

The Lazy Controller

The Associative Machine

Cognitive Ease

Primed

Mood

Happiness lets us be more intuitive, more creative, letting System I take the lead. Also, we are more prone to error because of reduced vigilance.

Norms, Surprises, and Causes

Assessing Normality

Surprise:
When we expect something, something else happens or does not happen. Recurrence lowers the surprise effect.

Passive vs. active expectation

An event appears normal if the pattern has already been seen before.

Moses illusion:

How many animals of each kind did Moses take into the ark?

Not Moses, Noah. All are mentioned in the Old Testament, so it is not shocking.

Seeing Causes and Intentions

Inference between action and sub‑consequences, like a billiard game.

Need for coherency: If two unrelated things appear on the headlines of a journal, we expect some kind of relationship between them.

associative coherence – evoked stuff

impression of causality, generated by System I, which is not reasoning about true causation.

intentional causality:
Heider and Simmel – associate triangles and circles with people.

Usually, people take the soul as the source and cause of the action.

To read: Paul Bloom, The Atlantic, 2005. An opposite view, separating physical and intentional causalities.

A Machine for Jumping to Conclusions

A Bias to Believe and Confirm

Example:
Ask participants to remember a few digits. Then have them read true and false sentences. With the memory task, people are better at discerning true from false. System II is engaged by the memory task; otherwise, System I stays in place and makes mistakes.

Halo Effect, Exaggerated Emotional Coherence

Because a person is good at some point, we assume they are good at other unverified points:

Independent judgment, error decorrelation needed.

What You See Is All There Is

How Judgments Happen

System II:
When asked a question, it searches memory for answers and directs its attention.

System I:
Continuously monitors what is happening in the world and in the mind, generating assessments about the situation.

Basic assessments are substituted for difficult questions.

Basic Assessments

How to interact with a stranger. First, you evaluate a person’s dominance, trustworthiness, and whether they seem friendly or hostile. The shape of the face helps you infer intentions. Face reading is imperfect but can be helpful.

When speaking face‑to‑face, it is easier to understand intention than over the phone or in written form.

Intensity Matching

Ranking is easy (relative ranking); assigning a grade is harder.

Mental Shotgun

Some tasks are easy, but you need to pay attention (e.g., counting syllables). Control is imprecise, and “we compute much more than we want or need”: mental shotgun.

Answering an Easier Question

Rely on evidence you cannot fully explain nor defend.

Substituting Questions

How happy are you these days?

vs.

How many dates did you have last month?

Alone, the first question is not easy; with context, it becomes manageable.

Affect Heuristic

Likes and dislikes shape what we want to hear or perceive.

System II slows down the thinking of System I, imposing logical analysis and self‑criticism—though it should not criticize System I’s emotions. Search for information and arguments.

Heuristics and Biases

The Law of Small Numbers

Small samples often produce extreme outcomes.

Random generation does not guarantee an equilibrated distribution.

For (p = 1/2), which pattern is more frequent?

Anchors

The Science of Availability

Availability, Emotion, and Risk

Tom W.’s Specialty

Linda: Less Is More

Cause‑Trump Statistics

Regression to the Mean

Taming Intuitive Prediction


Overconfidence

The Illusion of Understanding

The Illusion of Validity

Traders know about market products, etc., but they are still very bad at predicting the future—though less so than newbies.

Individuals tend to be worse, lower than average compared with traders.

Intuitions vs. Formula

Algorithms do not make errors. They always predict the same way and are rigorous.

Expert Intuition: When Can We Trust It?

Intuition is nothing more than recognition.

The Outside View

The Engine of Capitalism


Choices

Bernoulli’s Errors

Prospect Theory

The Endowment Effect

Bad Events

The Fourfold Pattern

Rare Events

Risk Policies

Keeping Score

Reversals

Frames and Reality


Two Selves

Two Selves

Life as a Story

Experiments

We remember spikes and ends.

Experienced Well‑Being

Recall interruptions as breaks in pleasurable activities.

Positive feelings

Negative feelings

Feelings depend on the immediate environment (office, people, noise). They are more focused on direct activities/events. Active experiences (e.g., sports) are better than passive ones (e.g., watching TV).

Strong recurrent thoughts sometimes dominate over direct events.

Example: People eating in front of the TV don’t appreciate the meal as much.

Salary: There is a threshold (~ $75,000 US) beyond which salary increases no longer raise happiness; this also depends on the cost of living.

Experience sampling: Instead of asking someone to write all life details at once, a device (phone) vibrates randomly during the day to prompt brief reflections, encouraging attention to the present moment.

DRM – Day Reconstruction Method

Thinking About Life

Marriage is an illusion.

Your happiness over the life course:

Goals make a large difference. People with goals progress further (e.g., higher salaries if planned).

If you don’t reach your goal, you feel more unhappy; achieving it makes you happier than average.

Focusing Illusion

Speedy answers to well‑being questions are often heuristic, not “true” judgments (e.g., you may recall a recent bad‑luck event instead of evaluating overall satisfaction).

Nothing in life is as important as you think it is when you are thinking about it.

When evaluating groups (e.g., people in a rainy country, paraplegic individuals), we may assume they are worse off, but because they are accustomed to their circumstances, they may not care as much.

Miswanting

Errors arise from affective forecasting—relying on current short‑term feelings rather than long‑term considerations.