Thinking, Fast & Slow
by Daniel Kahneman
Our intuition sometimes fails us, we all know this. But why does this happen?
In this book, Daniel Kahneman takes us on a groundbreaking tour of the inner workings of our mind. Daniel, or Mr. Kahneman, whatever, does this by refering to two distinct "agents" in the human mind, and calls these agents System 1 and System 2.
System 1 can be thought of as the Fast thinker, and System two the Slow one. Hence the title.
Daniel explains throughout the book that most errors in our intuitive thinking occur due to the fact that System 1 is doing the thinking in a situation where System 2 would be more appropriate. He discusses several of these errors in the form of biases.
Say I want to invest my life savings in stocks and say Ford has caught my eye. I now want to decide whether or not to invest in Ford or not.
- If System 1 would do the thinking, as is so often the case, I would, without knowing it, replace this difficult question by a simpler one. For example: Do I like Ford cars? The answer to this simple question is then used as the answer to the more difficult one, without me being any the wiser. Yes I like Ford cars, Yes I will invest in Ford. (not the best argument)
- Ideally System 2 would do the thinking here. In this case the real question, i.e. should I invest in Ford or not, is addressed and answered through in-depth analysis and reflection.
The book's divided in 5 parts. In a first part, the basic elements of the two-systems approach to judgement and choice is explained. Part two focuses on the study of judgement heuristics and takes a close look at why statistical thinking seems so difficult for most people. In a third part, Daniel takes a look at our incredible confidence in what we believe to know. Confidence that often appears to be unjustified. The fourth part includes Economics in the story and in the fifth and last part of the book, recent research is described.
Well, that's that. Now what's the real message here?
If you want to learn about how your mind, and by extension the mind of others, works, read this book.
It's really that simple, I'm afraid.
Enjoy the read!
Amazon summary for Thinking, Fast and Slow by Daniel Kahneman
In the international bestseller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation―each of these can be understood only by knowing how the two systems shape our judgments and decisions.
Engaging the reader in a lively conversation about how we think, Kahneman reveals where we can and cannot trust our intuitions and how we can tap into the benefits of slow thinking. He offers practical and enlightening insights into how choices are made in both our business and our personal lives―and how we can use different techniques to guard against the mental glitches that often get us into trouble. Winner of the National Academy of Sciences Best Book Award and the Los Angeles Times Book Prize and selected by The New York Times Book Review as one of the ten best books of 2011, Thinking, Fast and Slow is destined to be a classic.