Thinking, Fast and Slow

Daniel Kahneman

I never understood why first impressions matter until I read Thinking, Fast and Slow. There’s a lot of things I didn’t understand until I read this book. Turns out I’m interested in psychology. People are naturally extremely intuitive and most of the time your intuition is correct. It’s your intuition that tells you when to eat and when to sleep. It’s also your intuition that lets you get fooled by advertising.

Kahneman walks us through the two systems of the mind, System 1 (your intuitive, fast thinking brain) and System 2 (your rational, slow-thinking brain). System 1 is what’s in charge most of the time and when it occasionally gets stumped it’s calls for backup from System 2.

What’s 2+2? System 1 is responsible for coming to the answer for that.

What’s 24×17? System 2 solves that once System 1 realizes that we need to work to figure it out.

The power of System 1 can be enhanced. This can be called gaining a skill. As you practice something repeatedly in a regular environment with a quick feedback cycle, the actions of System 2 can become ingrained into System 1. Learning to shoot a bow and arrow takes focus and attention (System 2) but eventually becomes natural over time (System 1).

Ideas

Ideas can be thought of as nodes in a graph in your head. This is called the associative memory and time is an important component of how the memories are linked. Having just seen the word EAT, you are more likely to complete the word SO_P as SOUP and not SOAP. This is because of your associatvie memory and is called priming. One famous experiment primed experimentees with words related to old aged. Next they were asked to walk down a hall way and timed unknowingly. The treatment group (those who had been primed) in fact walked slower on average. This works in reverse also. If you walk slowly for some time and are then shown a group of words, you’ll pick words related to old age.

Advertising is a form of priming because it primes you to think about their product. The more recent an ad was seen on TV or the more memorable it is, the more likely it will brought up in your associative machinery. Experiments have shown that money-primed people are more individualistic and selfish. They are less likely to help someone in need and less likely to demand help. Having seen a word recently, it’s your experience greater cognitive ease thus giving you a sense of familiarity.

Cognitive ease is a notion where people tend to think about things which are easiest to them. Things that are familiar. This is part of the reason why media and political campaigns have slogans they repeat often. To increase the feeling of familiarity. This is also a way and lie can be turned to truth because once something has been repeated enough, truth becomes indistinguishable from familiarity.

Jumping to conclusions

System 2 governs our rational mind. Because of its inherent laziness, people are most prone to believe things when it’s busy doing something else or depleted of energy.

When System 2 tries to test a hypothesis, it looks for positive examples. This is called confirmation bias. Related to confirmation bias is the halo effect. When you like a feature about a person, you’re more likely to appreciate other things too. This is why first impressions are important. It gives people a reason to continue liking you. Going downhill vs going uphill.

System 1 is particularly good creating stories. The stories it creates are based on the bonds between different ideas in the associative machinery. The metric of success for System 1 is the coherence of the story, not the quality of the data. This combination of coherence-seeking behavior from System 1 and the laziness of System 2 means that System 2 will likely endorse first impressions from System 1. Kahneman calls this propensity for jumping to conclusions What You See Is All There Is (WYSIATI).

Judgements

System 1 is constantly working make sense of the world and does this using models and heuristics. Judgements can be substituted for each other. When asked if it’s ok to steal some bread for you hungry family, you may instead substitute that question for “is it ok to steal?”, one that’s (potentially) simpler to answer. Two aspects of this substitution apparatus is the ability to translate values across dimensions (“If Sam is as tall as he is intelligent, how tall is Sam?”) and perform a mental shotgun where you perform more computation than necessary.

The Law of Small Numbers

People are good at intuitive thinking but bad at statistical thinking which is becoming increasingly needed in our world of information. The law of small numbers states that low sample sizes have higher variability. A study of american healthcare found that small, rural towns, usually Republican, had far fewer incidences of kidney cancer. However, the data also showed that the places with the highest incidences of kidney cancer were also in small rural towns. Their small sample size caused them to deviate farther from the norm.

Anchors

When you’re asked to estimate a quantity you’re unsure of, your estimate can be swayed by knowing another estimate first. 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. What I find interesting is that this idea flies in the face of conventional negotiation wisdom which is to never say the price first. Maybe I’m getting wisdom from the wrong places. Anchoring says that I should say a number higher than expected to anchor the other persons estimate. I know I’ve fallen susceptible to this myself, especially at flea markets.

Sometimes anchoring is part of a deliberate action of System 2. When asked you estimate something and also given an anchor, you start your estimate at the anchor and begin moving away until you become unsure. This adjustment mechanism usually ends prematurely because the scan of the estimation space is linear.

The Availability Heuristic

You are more likely to estimate something in greater quantity if it’s easier to recall. Couples were individually asked what they thought their percentage contribution to keep the house tidy was. The results showed that the sum of estimations was above 100% because it’s easier to recall your own contributions than someone else’s. This is one explanation of why someone may feel they’re pulling more than their own share in a team exercise.

The Conjunction Fallacy

Kahneman created the idea of a conjunction fallacy: judging the conjunction of two events as more probably than one of the events in direct comparison (feminist bank-teller vs bank-teller). The conjunction fallacy works because System 1 likes to make coherent stories and coherent stories become easier to make when more details are given.

Regression to the Mean

It’s likely that a normal event will follow an exceptional one. Scoring two baskets back to back from half court is less likely than just one. Evidence has shown that positive reinforcement is a better teaching aid than negative reinforcement but regression to the mean partly explains why people believe negative reinforcement works. When you yell at someone for doing exceptionally poorly, regression to the mean explains why they do better.

Formulas

People tend to be overconfident about their intuitions. When your intuition is relied on for an estimation, it’s usually worse off than a simple algorithm. It was found that expert wine tasters who were asked to predict the future value of a wine they tasted performed poorer than a simple algorithm. Kahneman found that using a simple 1-5 rating for various attributes of a soldier being interviewed for officer duty did a much better job of predicting that soldiers success through the military.

Loss Aversion

Losing hurts more than willing feels good. Loss aversion is why people would turn down a bet at the toss of a coin losing $100 on tails and winning $150 on heads. Loss aversion causes people to be risk averse when they’re winning but diminishing sensitivity explains why people tend to be risk seeing during a loss – would you rather lose 950k for sure or take a 90% to lose a million? Loss Aversion explains why people tend to stick to what they know, for fear of losing something that works.

The Peak-End Rule

There are two selves: the experiencing self and the remembering self. The remembering self governs our long term decisions and these decisions are governed by two rules: the peak-end rule and duration neglect. When remembering an experience, you overweight the peak and end intensities and forget how long the experience lasted. This is why short, intense excitement is preferable to long, moderate happiness. In a famous experiment, participants were asked to put their hand in cold water three times. Once is cold water for 60 seconds and once in cold water for 60 seconds which was then warmed for another 30 seconds. For the third trial they were asked to pick which of the previous two they would like to repeat and the 90 second trial was preferred even though it should have been strictly more painful (it was longer and never warmed up enough to be pleasant). This is because of duration neglect and because the end of the second trial was overweighted.

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Appendix

Find my notes here.

Buy the book here.

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