"Thinking, Fast and Slow"

[fiefoe]

The book covers a lot of familiar ground, and the most interesting part is see how Daniel Kahneman uses "tricks" covered in the book to make us readers remember better all the tricks our minds play with us.

• A deeper understanding of judgments and choices also requires a richer vocabulary than is available in everyday language. The hope for informed gossip is that there are distinctive patterns in the errors people make. Systematic errors are known as biases, and they recur predictably in particular circumstances.


• Do people have a similar intuitive feel for the basic principles of statistics? Amos reported that the answer was a qualified yes.


• * during the years of our collaboration neither of us ever rejected out of hand anything the other said. Indeed, one of the great joys I found in the collaboration was that Amos frequently saw the point of my vague ideas much more clearly than I did. Amos was the more logical thinker, with an orientation to theory and an unfailing sense of direction. I was more intuitive and rooted in the psychology of perception, from which we borrowed many ideas.


• The resemblance of Steve’s personality to that of a stereotypical librarian strikes everyone immediately, but equally relevant statistical considerations are almost always ignored. Did it occur to you that there are more than 20 male farmers for each male librarian in the United States?


• * we judged the size of categories by the ease with which instances came to mind. We called this reliance on the ease of memory search the availability heuristic... Frequently mentioned topics populate the mind even as others slip away from awareness. In turn, what the media choose to report corresponds to their view of what is currently on the public’s mind. It is no accident that authoritarian regimes exert substantial pressure on independent media.


• * The question that the executive faced (should I invest in Ford stock?) was difficult, but the answer to an easier and related question (do I like Ford cars?) came readily to his mind and determined his choice. This is the essence of intuitive heuristics: when faced with a difficult question, we often answer an easier one instead, usually without noticing the substitution.


• * The spontaneous search for an intuitive solution sometimes fails—neither an expert solution nor a heuristic answer comes to mind. In such cases we often find ourselves switching to a slower, more deliberate and effortful form of thinking. This is the slow thinking of the title. Fast thinking includes both variants of intuitive thought—the expert and the heuristic—as well as the entirely automatic mental activities of perception and memory, .. I speak of the features of intuitive and deliberate thought as if they were traits and dispositions of two characters in your mind. In the picture that emerges from recent research, the intuitive System 1 is more influential than your experience tells you, and it is the secret author of many of the choices and judgments you make. Most of this book is about the workings of System 1 and the mutual influences between it and System 2.


• Part 1 presents the basic elements of a two-systems approach to judgment and choice.
  Part 2 updates the study of judgment heuristics and explores a major puzzle: Why is it so difficult for us to think statistically?
  Part 3, which describes a puzzling limitation of our mind: our excessive confidence in what we believe we know, and our apparent inability to acknowledge the full extent of our ignorance and the uncertainty of the world we live in.
  Part 4, the key concepts of prospect theory, the model of choice that Amos and I published in 1979. Subsequent chapters address several ways human choices deviate from the rules of rationality.
  Part 5 describes recent research that has introduced a distinction between two selves, the experiencing self and the remembering self, which do not have the same interests... How two selves within a single body can pursue happiness raises some difficult questions, both for individuals and for societies that view the well-being of the population as a policy objective.


• The process was mental work: deliberate, effortful, and orderly—a prototype of slow thinking. The computation was not only an event in your mind; your body was also involved. Your muscles tensed up, your blood pressure rose, and your heart rate increased. Someone looking closely at your eyes while you tackled this problem would have seen your pupils dilate.


• • System 1 operates automatically and quickly, with little or no effort and no sense of voluntary control.
  • System 2 allocates attention to the effortful mental activities that demand it, including complex computations. The operations of System 2 are often associated with the subjective experience of agency, choice, and concentration.


• When we think of ourselves, we identify with System 2, the conscious, reasoning self that has beliefs, makes choices, and decides what to think about and what to do. Although System 2 believes itself to be where the action is, the automatic System 1 is the hero of the book. I describe System 1 as effortlessly originating impressions and feelings that are the main sources of the explicit beliefs and deliberate choices of System 2.


• Several of the mental actions in the list are completely involuntary. You cannot refrain from understanding simple sentences in your own language or from orienting to a loud unexpected sound,... The highly diverse operations of System 2 have one feature in common: they require attention and are disrupted when attention is drawn away.


• * The often-used phrase “pay attention” is apt: you dispose of a limited budget of attention that you can allocate to activities, and if you try to go beyond your budget, you will fail. It is the mark of effortful activities that they interfere with each other, which is why it is difficult or impossible to conduct several at once... many parents have discovered, perhaps with some guilt, that they can read a story to a child while thinking of something else.


• The gorilla study illustrates two important facts about our minds: we can be blind to the obvious, and we are also blind to our blindness.


• You can also feel a surge of conscious attention whenever you are surprised. System 2 is activated when an event is detected that violates the model of the world that System 1 maintains... System 2 is also credited with the continuous monitoring of your own behavior—the control that keeps you polite when you are angry, and alert when you are driving at night. System 2 is mobilized to increased effort when it detects an error about to be made.


• The division of labor between System 1 and System 2 is highly efficient: it minimizes effort and optimizes performance. The arrangement works well most of the time because System 1 is generally very good at what it does:.. it sometimes answers easier questions than the one it was asked, and it has little understanding of logic and statistics. One further limitation of System 1 is that it cannot be turned off... But you still see the bottom line as longer. You have chosen to believe the measurement, but you cannot prevent System 1 from doing its thing; you cannot decide to see the lines as equal, although you know they are.


• * Many years later I learned that the teacher had warned us against psychopathic charm, and the leading authority in the study of psychopathy confirmed that the teacher’s advice was sound. The analogy to the Müller-Lyer illusion is close. What we were being taught was not how to feel about that patient. Our teacher took it for granted that the sympathy we would feel for the patient would not be under our control; it would arise from System 1. Furthermore, we were not being taught to be generally suspicious of our feelings about patients. We were told that a strong attraction to a patient with a repeated history of failed treatment is a danger sign—like the fins on the parallel lines. It is an illusion—a cognitive illusion—and I (System 2) was taught how to recognize it and advised not to believe it or act on it.


• Biases cannot always be avoided, because System 2 may have no clue to the error... As a way to live your life, however, continuous vigilance is not necessarily good, and it is certainly impractical. Constantly questioning our own thinking would be impossibly tedious, and System 2 is much too slow and inefficient to serve as a substitute for System 1 in making routine decisions. The best we can do is a compromise: learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high. The premise of this book is that it is easier to recognize other people’s mistakes than our own.


• * You may well ask: What is the point of introducing fictitious characters with ugly names into a serious book? The answer is that the characters are useful because of some quirks of our minds, yours and mine. A sentence is understood more easily if it describes what an agent (System 2) does than if it describes what something is, what properties it has. In other words, “System 2” is a better subject for a sentence than “mental arithmetic.” The mind—especially System 1—appears to have a special aptitude for the construction and interpretation of stories about active agents, who have personalities, habits, and abilities.


• The task that you will perform is called Add-1. Here is how it goes: Start beating a steady rhythm (or better yet, set a metronome at 1/sec). Remove the blank card and read the four digits aloud. Wait for two beats, then report a string in which each of the original digits is incremented by 1. If the digits on the card are 5294, the correct response is 6305. Keeping the rhythm is important. <> Few people can cope with more than four digits in the Add-1 task, but if you want a harder challenge, please try Add-3.


• Hess also wrote of belladonna, a pupil-dilating substance that was used as a cosmetic, and of bazaar shoppers who wear dark glasses in order to hide their level of interest from merchants.


• When you turn on a bulb or a toaster, it draws the energy it needs but no more. Similarly, we decide what to do, but we have limited control over the effort of doing it... In contrast, the response to mental overload is selective and precise: System 2 protects the most important activity, so it receives the attention it needs; “spare capacity” is allocated second by second to other tasks.


• Studies of the brain have shown that the pattern of activity associated with an action changes as skill increases, with fewer brain regions involved. Talent has similar effects. Highly intelligent individuals need less effort to solve the same problems, as indicated by both pupil size and brain activity. A general “law of least effort” applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action.


• Effort is required to maintain simultaneously in memory several ideas that require separate actions, or that need to be combined according to a rule... System 2 is the only one that can follow rules, compare objects on several attributes, and make deliberate choices between options. The automatic System 1 does not have these capabilities. System 1 detects simple relations (“they are all alike,” “the son is much taller than the father”) and excels at integrating information about one thing... A crucial capability of System 2 is the adoption of “task sets”: it can program memory to obey an instruction that overrides habitual responses.


• One of the significant discoveries of cognitive psychologists in recent decades is that switching from one task to another is effortful, especially under time pressure. The need for rapid switching is one of the reasons that Add-3 and mental multiplication are so difficult... Modern tests of working memory require the individual to switch repeatedly between two demanding tasks, retaining the results of one operation while performing the other. People who do well on these tests tend to do well on tests of general intelligence. However, the ability to control attention is not simply a measure of intelligence; measures of efficiency in the control of attention predict performance of air traffic controllers.. The most effortful forms of slow thinking are those that require you to think fast.


• We normally avoid mental overload by dividing our tasks into multiple easy steps, committing intermediate results to long-term memory or to paper rather than to an easily overloaded working memory. We cover long distances by taking our time and conduct our mental lives by the law of least effort.


• Indeed, I suspect that the mild physical arousal of the walk may spill over into greater mental alertness. <> System 2 also has a natural speed. You expend some mental energy in random thoughts and in monitoring what goes on around you even when your mind does nothing in particular, but there is little strain.


• * In addition to the physical effort of moving my body rapidly along the path, a mental effort of self-control is needed to resist the urge to slow down. Self-control and deliberate thought apparently draw on the same limited budget of effort. <> For most of us, most of the time, the maintenance of a coherent train of thought and the occasional engagement in effortful thinking also require self-control.


• Fortunately, cognitive work is not always aversive, and people sometimes expend considerable effort for long periods of time without having to exert willpower. The psychologist Mihaly Csikszentmihalyi.. proposed for it, flow, has become part of the language. People who experience flow describe it as “a state of effortless concentration so deep that they lose their sense of time, of themselves, of their problems,”... Flow neatly separates the two forms of effort: concentration on the task and the deliberate control of attention. 


• It is now a well-established proposition that both self-control and cognitive effort are forms of mental work... The evidence suggests that you would be more likely to select the tempting chocolate cake when your mind is loaded with digits. System 1 has more influence on behavior when System 2 is busy, and it has a sweet tooth... controlling thoughts and behaviors is one of the tasks that System 2 performs.


• known to deplete self-control:  avoiding the thought of white bears / trying to impress others


• * the idea of mental energy is more than a mere metaphor. The nervous system consumes more glucose than most other parts of the body, and effortful mental activity appears to be especially expensive in the currency of glucose... The authors of the study plotted the proportion of approved requests against the time since the last food break. The proportion spikes after each meal, when about 65% of requests are granted. During the two hours or so until the judges’ next feeding, the approval rate drops steadily, to about zero just before the meal. (granting parole)


• more intelligent individuals are more likely than others to have rich representations of most things. Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed. Memory function is an attribute of System 1. However, everyone has the option of slowing down to conduct an active search of memory for all possibly relevant facts


• students who score very low on this test—the supervisory function of System 2 is weak in these people—and found that they are prone to answer questions with the first idea that comes to mind and unwilling to invest the effort needed to check their intuitions. Individuals who uncritically follow their intuitions about puzzles are also prone to accept other suggestions from System 1. In particular, they are impulsive, impatient, and keen to receive immediate gratification... Frederick’s findings suggest that the characters of our psychodrama have different “personalities.” System 1 is impulsive and intuitive; System 2 is capable of reasoning, and it is cautious, but at least for some people it is also lazy.


• * Stanovich published his conclusions in a book titled Rationality and the Reflective Mind, which offers a bold and distinctive approach to the topic of this chapter. He draws a sharp distinction between two parts of System 2—indeed, the distinction is so sharp that he calls them separate “minds.” One of these minds (he calls it algorithmic) deals with slow thinking and demanding computation. .. However, Stanovich argues that high intelligence does not make people immune to biases. Another ability is involved, which he labels rationality. Stanovich’s concept of a rational person is similar to what I earlier labeled “engaged.” The core of his argument is that rationality should be distinguished from intelligence. In his view, superficial or “lazy” thinking is a flaw in the reflective mind, a failure of rationality.


• Banana Vomit: The facial expression and the avoidance motion intensify the feelings to which they are linked, and the feelings in turn reinforce compatible ideas. All this happens quickly and all at once, yielding a self-reinforcing pattern of cognitive, emotional, and physical responses that is both diverse and integrated—it has been called associatively coherent. <> In a second or so you accomplished, automatically and unconsciously, a remarkable feat. Starting from a completely unexpected event, your System 1 made as much sense as possible of the situation—two simple words, oddly juxtaposed—by linking the words in a causal story;


• There are different types of links: causes are linked to their effects (virus → cold); things to their properties (lime → green); things to the categories to which they belong (banana → fruit). One way we have advanced beyond Hume is that we no longer think of the mind as going through a sequence of conscious ideas, one at a time. In the current view of how associative memory works, a great deal happens at once. An idea that has been activated does not merely evoke one other idea. It activates many ideas, which in turn activate others. Furthermore, only a few of the activated ideas will register in consciousness;


• If you have recently seen or heard the word EAT, you are temporarily more likely to complete the word fragment SO_P as SOUP than as SOAP. The opposite would happen, of course, if you had just seen WASH. We call this a priming effect... The “Florida effect” involves two stages of priming. First, the set of words primes thoughts of old age, though the word old is never mentioned; second, these thoughts prime a behavior, walking slowly,


• * College students were asked to rate the humor of cartoons from Gary Larson’s The Far Side while holding a pencil in their mouth. Those who were “smiling” (without any awareness of doing so) found the cartoons funnier than did those who were “frowning.”


• A study of voting patterns in precincts of Arizona in 2000 showed that the support for propositions to increase the funding of schools was significantly greater when the polling station was in a school than when it was in a nearby location.


• Money-primed people become more independent than they would be without the associative trigger. They persevered almost twice as long in trying to solve a very difficult problem before they asked the experimenter for help, a crisp demonstration of increased self-reliance. Money-primed people are also more selfish: they were much less willing to spend time helping another student... Her experiments are profound—her findings suggest that living in a culture that surrounds us with reminders of money may shape our behavior and our attitudes in ways that we do not know about and of which we may not be proud.


• In a subsequent test of the desirability of various products, people who had lied on the phone preferred mouthwash over soap, and those who had lied in e-mail preferred soap to mouthwash.


• Choose a completely new word, make it easier to see, and it will be more likely to have the quality of pastness. Indeed, a new word is more likely to be recognized as familiar if it is unconsciously primed by showing it for a few milliseconds just before the test, or if it is shown in sharper contrast than some other words in the list... you do not have to repeat the entire statement of a fact or idea to make it appear true. People who were repeatedly exposed to the phrase “the body temperature of a chicken” were more likely to accept as true the statement that “the body temperature of a chicken is 144°” (or any other arbitrary number). 


• The impression of familiarity is produced by System 1, and System 2 relies on that impression for a true/false judgment. <> The lesson of figure 5 is that predictable illusions inevitably occur if a judgment is based on an impression of cognitive ease or strain.


• * The aphorisms were judged more insightful when they rhymed than when they did not. <> Finally, if you quote a source, choose one with a name that is easy to pronounce... You read this correctly: performance was better with the bad font. Cognitive strain, whatever its source, mobilizes System 2, which is more likely to reject the intuitive answer suggested by System 1.


• To survive in a frequently dangerous world, an organism should react cautiously to a novel stimulus, with withdrawal and fear. Survival prospects are poor for an animal that is not suspicious of novelty. However, it is also adaptive for the initial caution to fade if the stimulus is actually safe.


• Mood evidently affects the operation of System 1: when we are uncomfortable and unhappy, we lose touch with our intuition. <> These findings add to the growing evidence that good mood, intuition, creativity, gullibility, and increased reliance on System 1 form a cluster. At the other pole, sadness, vigilance, suspicion, an analytic approach, and increased effort also go together. A happy mood loosens the control of System 2 over performance:


• The main function of System 1 is to maintain and update a model of your personal world, which represents what is normal in it... surprise itself is the most sensitive indication of how we understand our world and what we expect from it. There are two main varieties of surprise.


• * Michotte had a different idea: he argued that we see causality, just as directly as we see color... Experiments have shown that six-month-old infants see the sequence of events as a cause-effect scenario, and they indicate surprise when the sequence is altered. We are evidently ready from birth to have impressions of causality, which do not depend on reasoning about patterns of causation. They are products of System 1.


• The psychologist Paul Bloom, writing in The Atlantic in 2005, presented the provocative claim that our inborn readiness to separate physical and intentional causality explains the near universality of religious beliefs. He observes that “we perceive the world of objects as essentially separate from the world of minds, making it possible for us to envision soulless bodies and bodiless souls.” The two modes of causation that we are set to perceive make it natural for us to accept the two central beliefs of many religions: an immaterial divinity is the ultimate cause of the physical world, and immortal souls temporarily control our bodies while we live and leave them behind as we die. In Bloom’s view, the two concepts of causality were shaped separately by evolutionary forces, building the origins of religion into the structure of System 1. <> The prominence of causal intuitions is a recurrent theme in this book because people are prone to apply causal thinking inappropriately, to situations that require statistical reasoning. Statistical thinking derives conclusions about individual cases from properties of categories and ensembles.


• * Speaking of a woman he dislikes, he says, “Her favorite position is beside herself, and her favorite sport is jumping to conclusions.”... now I believe it offers an apt description of how System 1 functions... Conscious doubt is not in the repertoire of System 1; it requires maintaining incompatible interpretations in mind at the same time, which demands mental effort. Uncertainty and doubt are the domain of System 2.


• * The psychologist Daniel Gilbert: proposed that understanding a statement must begin with an attempt to believe it: you must first know what the idea would mean if it were true. Only then can you decide whether or not to unbelieve it. The initial attempt to believe is an automatic operation of System 1, which involves the construction of the best possible interpretation of the situation. Even a nonsensical statement, Gilbert argues, will evoke initial belief...Gilbert sees unbelieving as an operation of System 2,


• The moral is significant: when System 2 is otherwise engaged, we will believe almost anything. System 1 is gullible and biased to believe, System 2 is in charge of doubting and unbelieving, but System 2 is sometimes busy, and often lazy. Indeed, there is evidence that people are more likely to be influenced by empty persuasive messages, such as commercials, when they are tired and depleted.


• The initial traits in the list change the very meaning of the traits that appear later. The stubbornness of an intelligent person is seen as likely to be justified and may actually evoke respect, but intelligence in an envious and stubborn person makes him more dangerous. The halo effect is also an example of suppressed ambiguity: like the word bank, the adjective stubborn is ambiguous and will be interpreted in a way that makes it coherent with the context... the halo effect increases the weight of first impressions, sometimes to the point that subsequent information is mostly wasted.


• * My grades for the essays of a single student often varied over a considerable range. The lack of coherence left me uncertain and frustrated. <> I was now less happy with and less confident in my grades than I had been earlier, but I recognized that this was a good sign, an indication that the new procedure was superior. The consistency I had enjoyed earlier was spurious; it produced a feeling of cognitive ease, and my System 2 was happy to lazily accept the final grade.


• * The principle of independent judgments (and decorrelated errors) has immediate applications for the conduct of meetings... A simple rule can help: before an issue is discussed, all members of the committee should be asked to write a very brief summary of their position. This procedure makes good use of the value of the diversity of knowledge and opinion in the group.


• The combination of a coherence-seeking System 1 with a lazy System 2 implies that System 2 will endorse many intuitive beliefs, which closely reflect the impressions generated by System 1.


• * It is the consistency of the information that matters for a good story, not its completeness. Indeed, you will often find that knowing little makes it easier to fit everything you know into a coherent pattern.


• Although the instructions required only a comparison of sounds, the participants also compared their spelling, and the mismatch on the irrelevant dimension slowed them down. An intention to answer one question evoked another, which was not only superfluous but actually detrimental to the main task.


• Self-criticism is one of the functions of System 2. In the context of attitudes, however, System 2 is more of an apologist for the emotions of System 1 than a critic of those emotions—an endorser rather than an enforcer. Its search for information and arguments is mostly constrained to information that is consistent with existing beliefs, not with an intention to examine them. An active, coherence-seeking System 1 suggests solutions to an undemanding System 2.


• Characteristics of System 1:...  computes more than intended (mental shotgun)
  • sometimes substitutes an easier question for a difficult one (heuristics)
  • is more sensitive to changes than to states (prospect theory)*• overweights low probabilities*

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• Now consider the counties in which the incidence of kidney cancer is highest. These ailing counties tend to be mostly rural, sparsely populated, and located in traditionally Republican states in the Midwest, the South, and the West... The key factor is not that the counties were rural or predominantly Republican. It is that rural counties have small populations. And the main lesson to be learned is not about epidemiology, it is about the difficult relationship between our mind and statistics.


• Even now, you must exert some mental effort to see that the following two statements mean exactly the same thing:
  • Large samples are more precise than small samples.
  • Small samples yield extreme results more often than large samples do.


• Like most research psychologists, I had routinely chosen samples that were too small and had often obtained results that made no sense. Now I knew why: the odd results were actually artifacts of my research method.


• A careful statistical analysis revealed that the distribution of hits was typical of a random process—and typical as well in evoking a strong impression that it was not random. “To the untrained eye,” Feller remarks, “randomness appears as regularity or tendency to cluster.”


• If the statisticians who reported to the Gates Foundation had asked about the characteristics of the worst schools, they would have found that bad schools also tend to be smaller than average. The truth is that small schools are not better on average; they are simply more variable.


• * The phenomenon we were studying is so common and so important in the everyday world that you should know its name: it is an anchoring effect. It occurs when people consider a particular value for an unknown quantity before estimating that quantity. What happens is one of the most reliable and robust results of experimental psychology: the estimates stay close to the number that people considered—hence the image of an anchor.


• You did not believe for a moment that Gandhi lived for 144 years, but your associative machinery surely generated an impression of a very ancient person. System 1 understands sentences by trying to make them true, and the selective activation of compatible thoughts produces a family of systematic errors that make us gullible and prone to believe too strongly whatever we believe.


• the initial anchor has a powerful effect. My advice to students when I taught negotiations was that if you think the other side has made an outrageous proposal, you should not come back with an equally outrageous counteroffer, creating a gap that will be difficult to bridge in further negotiations. Instead you should make a scene, storm out or threaten to do so, and make it clear—to yourself as well as to the other side—that you will not continue the negotiation with that number on the table.


• Would the self-estimated contributions add up to 100%, or more, or less? As expected, the self-assessed contributions added up to more than 100%. The explanation is a simple availability bias: both spouses remember their own individual efforts and contributions much more clearly than those of the other, and the difference in availability leads to a difference in judged frequency. The bias is not necessarily self-serving: spouses also overestimated their contribution to causing quarrels, although to a smaller extent than their contributions to more desirable outcomes.


• The contest yielded a clear-cut winner: people who had just listed twelve instances rated themselves as less assertive than people who had listed only six. Furthermore, participants who had been asked to list twelve cases in which they had not behaved assertively ended up thinking of themselves as quite assertive! If you cannot easily come up with instances of meek behavior, you are likely to conclude that you are not meek at all. Self-ratings were dominated by the ease with which examples had come to mind. The experience of fluent retrieval of instances trumped the number retrieved.


• the psychologist Jonathan Haidt said in another context, “The emotional tail wags the rational dog.” The affect heuristic simplifies our lives by creating a world that is much tidier than reality. Good technologies have few costs in the imaginary world we inhabit, bad technologies have no benefits, and all decisions are easy.


• * the jurist Timur Kuran, invented a name for the mechanism through which biases flow into policy: the availability cascade. They comment that in the social context, “all heuristics are equal, but availability is more equal than the others.” They have in mind an expanded notion of the heuristic, in which availability provides a heuristic for judgments other than frequency. In particular, the importance of an idea is often judged by the fluency (and emotional charge) with which that idea comes to mind... In today’s world, terrorists are the most significant practitioners of the art of inducing availability cascades. With a few horrible exceptions such as 9/11, the number of casualties from terror attacks is very small relative to other causes of death.


• The representativeness heuristic is involved when someone says “She will win the election; you can see she is a winner” or “He won’t go far as an academic; too many tattoos.” We rely on representativeness when we judge the potential leadership of a candidate for office by the shape of his chin or the forcefulness of his speeches. <> Although it is common, prediction by representativeness is not statistically optimal. Michael Lewis’s bestselling Moneyball is a story about the inefficiency of this mode of prediction.


• One sin of representativeness is an excessive willingness to predict the occurrence of unlikely (low base-rate) events.


• Now focus on the critical items in the list: Does Linda look more like a bank teller, or more like a bank teller who is active in the feminist movement? Everyone agrees that Linda fits the idea of a “feminist bank teller” better than she fits the stereotype of bank tellers.  The stereotypical bank teller is not a feminist activist, and adding that detail to the description makes for a more coherent story. <> The twist comes in the judgments of likelihood, because there is a logical relation between the two scenarios.


• Remarkably, the sinners seemed to have no shame. When I asked my large undergraduate class in some indignation, “Do you realize that you have violated an elementary logical rule?” someone in the back row shouted, “So what?” and a graduate student who made the same error explained herself by saying, “I thought you just asked for my opinion.”


• As in the dinnerware experiment, the larger sets were valued more than the smaller ones in joint evaluation, but less in single evaluation. From the perspective of economic theory, this result is troubling: the economic value of a dinnerware set or of a collection of baseball cards is a sum-like variable. Adding a positively valued item to the set can only increase its value.


• * We consider it morally desirable for base rates to be treated as statistical facts about the group rather than as presumptive facts about individuals. In other words, we reject causal base rates. <> The social norm against stereotyping, including the opposition to profiling, has been highly beneficial in creating a more civilized and more equal society. It is useful to remember, however, that neglecting valid stereotypes inevitably results in suboptimal judgments. Resistance to stereotyping is a laudable moral position, but the simplistic idea that the resistance is costless is wrong.


• Did students learn from the results of the helping experiment anything that significantly changed their way of thinking? The answer is straightforward: they learned nothing at all. Their predictions about the two individuals were indistinguishable from the predictions made by students who had not been exposed to the statistical results of the experiment. They knew the base rate in the group from which the individuals had been drawn, but they remained convinced that the people they saw on the video had been quick to help the stricken stranger... Subjects’ unwillingness to deduce the particular from the general was matched only by their willingness to infer the general from the particular.


• *  There is a deep gap between our thinking about statistics and our thinking about individual cases. Statistical results with a causal interpretation have a stronger effect on our thinking than noncausal information. But even compelling causal statistics will not change long-held beliefs or beliefs rooted in personal experience. On the other hand, surprising individual cases have a powerful impact and are a more effective tool for teaching psychology because the incongruity must be resolved and embedded in a causal story. That is why this book contains questions that are addressed personally to the reader. You are more likely to learn something by finding surprises in your own behavior than by hearing surprising facts about people in general.


• His observation was astute and correct: occasions on which he praised a performance were likely to be followed by a disappointing performance, and punishments were typically followed by an improvement. But the inference he had drawn about the efficacy of reward and punishment was completely off the mark. What he had observed is known as regression to the mean, which in that case was due to random fluctuations in the quality of performance.


• * I had stumbled onto a significant fact of the human condition: the feedback to which life exposes us is perverse. Because we tend to be nice to other people when they please us and nasty when they do not, we are statistically punished for being nice and rewarded for being nasty.


• Whether undetected or wrongly explained, the phenomenon of regression is strange to the human mind. So strange, indeed, that it was first identified and understood two hundred years after the theory of gravitation and differential calculus.


• * It took Francis Galton several years to figure out that correlation and regression are not two concepts—they are different perspectives on the same concept. The general rule is straightforward but has surprising consequences: whenever the correlation between two scores is imperfect, there will be regression to the mean.


• Highly intelligent women tend to marry men who are less intelligent than they are. / The correlation between the intelligence scores of spouses is less than perfect.... the statement you found interesting and the statement you found trivial are algebraically equivalent.


• Indeed, the statistician David Freedman used to say that if the topic of regression comes up in a criminal or civil trial, the side that must explain regression to the jury will lose the case... Without special instruction, and in quite a few cases even after some statistical instruction, the relationship between correlation and regression remains obscure. System 2 finds it difficult to understand and learn. This is due in part to the insistent demand for causal interpretations, which is a feature of System 1.


• In order to conclude that an energy drink—or any other treatment—is effective, you must compare a group of patients who receive this treatment to a “control group” that receives no treatment (or, better, receives a placebo). The control group is expected to improve by regression alone, and the aim of the experiment is to determine whether the treated patients improve more than regression can explain.


• 1. Start with an estimate of average GPA.
  2. Determine the GPA that matches your impression of the evidence.
  3. Estimate the correlation between your evidence and GPA.
  4. If the correlation is .30, move 30% of the distance from the average to the matching GPA.
  Step 1 gets you the baseline, ... Step 2 is your intuitive prediction, which matches your evaluation of the evidence. Step 3 moves you from the baseline toward your intuition, but the distance you are allowed to move depends on your estimate of the correlation. You end up, at step 4, with a prediction that is influenced by your intuition but is far more moderate.


• * Paradoxically, it is easier to construct a coherent story when you know little, when there are fewer pieces to fit into the puzzle. Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.


• Hindsight is especially unkind to decision makers who act as agents for others—physicians, financial advisers, third-base coaches, CEOs, social workers, diplomats, politicians. We are prone to blame decision makers for good decisions that worked out badly and to give them too little credit for successful moves that appear obvious only after the fact. There is a clear outcome bias.


• Although hindsight and the outcome bias generally foster risk aversion, they also bring undeserved rewards to irresponsible risk seekers, such as a general or an entrepreneur who took a crazy gamble and won.


• Subjective confidence in a judgment is not a reasoned evaluation of the probability that this judgment is correct. Confidence is a feeling, which reflects the coherence of the information and the cognitive ease of processing it.


• That was odd: What made one person buy and the other sell? What did the sellers think they knew that the buyers did not? <> Since then, my questions about the stock market have hardened into a larger puzzle: a major industry appears to be built largely on an illusion of skill.


• The results were unequivocally bad. On average, the shares that individual traders sold did better than those they bought, by a very substantial margin: 3.2 percentage points per year, above and beyond the significant costs of executing the two trades.


• Dr. Apgar would make a systematic assessment of a newborn. “That’s easy,” she replied. “You would do it like this.” Apgar jotted down five variables (heart rate, respiration, reflex, muscle tone, and color) and three scores (0, 1, or 2, depending on the robustness of each sign). Realizing that she might have made a breakthrough that any delivery room could implement, Apgar began rating infants by this rule one minute after they were born.


• We eventually concluded that our disagreement was due in part to the fact that we had different experts in mind. Klein had spent much time with fireground commanders, clinical nurses, and other professionals who have real expertise. I had spent more time thinking about clinicians, stock pickers, and political scientists trying to make unsupportable long-term forecasts. Not surprisingly, his default attitude was trust and respect; mine was skepticism.


• • an environment that is sufficiently regular to be predictable • an opportunity to learn these regularities through prolonged practice <> When both these conditions are satisfied, intuitions are likely to be skilled. Chess is an extreme example of a regular environment,


• In contrast, stock pickers and political scientists who make long-term forecasts operate in a zero-validity environment. Their failures reflect the basic unpredictability of the events that they try to forecast. <> Some environments are worse than irregular. Robin Hogarth described “wicked” environments, in which professionals are likely to learn the wrong lessons from experience. He borrows from Lewis Thomas the example of a physician in the early twentieth century who often had intuitions about patients who were about to develop typhoid. Unfortunately, he tested his hunch by palpating the patient’s tongue, without washing his hands between patients.


• Remember this rule: intuition cannot be trusted in the absence of stable regularities in the environment.


• Errors in the initial budget are not always innocent. The authors of unrealistic plans are often driven by the desire to get the plan approved—whether by their superiors or by a client—supported by the knowledge that projects are rarely abandoned unfinished merely because of overruns in costs or completion times.


• The evidence for the cognitive interpretation of the above-average effect is that when people are asked about a task they find difficult (for many of us this could be “Are you better than average in starting conversations with strangers?”), they readily rate themselves as below average. The upshot is that people tend to be overly optimistic about their relative standing on any activity in which they do moderately well.


• President Truman famously asked for a “one-armed economist” who would take a clear stand; he was sick and tired of economists who kept saying, “On the other hand …”


• The effects of high optimism on decision making are, at best, a mixed blessing, but the contribution of optimism to good implementation is certainly positive. The main benefit of optimism is resilience in the face of setbacks.


• * I have always believed that scientific research is another domain where a form of optimism is essential to success: I have yet to meet a successful scientist who lacks the ability to exaggerate the importance of what he or she is doing, and I believe that someone who lacks a delusional sense of significance will wilt in the face of repeated experiences of multiple small failures and rare successes, the fate of most researchers.


• * He labels his proposal the premortem. The procedure is simple: when the organization has almost come to an important decision but has not formally committed itself, Klein proposes gathering for a brief session a group of individuals who are knowledgeable about the decision. The premise of the session is a short speech: “Imagine that we are a year into the future. We implemented the plan as it now exists. The outcome was a disaster. Please take 5 to 10 minutes to write a brief history of that disaster.”... The suppression of doubt contributes to overconfidence in a group where only supporters of the decision have a voice. The main virtue of the premortem is that it legitimizes doubts.


• The field had a theory, expected utility theory, which was the foundation of the rational-agent model and is to this day the most important theory in the social sciences. Expected utility theory was not intended as a psychological model; it was a logic of choice, based on elementary rules (axioms) of rationality.


• His utility function explained why poor people buy insurance and why richer people sell it to them. As you can see in the table, the loss of 1 million causes a loss of 4 points of utility (from 100 to 96) to someone who has 10 million and a much larger loss of 18 points (from 48 to 30) to someone who starts off with 3 million. The poorer man will happily pay a premium to transfer the risk to the richer one, which is what insurance is about.


• The longevity of the theory is all the more remarkable because it is seriously flawed. The errors of a theory are rarely found in what it asserts explicitly; ... The happiness that Jack and Jill experience is determined by the recent change in their wealth, relative to the different states of wealth that define their reference points... “This theory is seriously wrong because it ignores the fact that utility depends on the history of one’s wealth, not only on present wealth.”... Still, it took us years to explore the implications of thinking about outcomes as gains and losses... In this theory, the utilities of gains and losses are allowed to differ only in their sign (+ or –). There is no way to represent the fact that the disutility of losing $500 could be greater than the utility of winning the same amount—though of course it is.


• The distinctive feature is that both the shoes the merchant sells you and the money you spend from your budget for shoes are held “for exchange.” They are intended to be traded for other goods. Other goods, such as wine and Super Bowl tickets, are held “for use,” to be consumed or otherwise enjoyed. Your leisure time and the standard of living that your income supports are also not intended for sale or exchange.


• In sharp contrast, experienced traders showed no trace of an endowment effect: 48% of them traded! At least in a market environment in which trading was the norm, they showed no reluctance to trade... Veteran traders have apparently learned to ask the correct question, which is “How much do I want to have that mug, compared with other things I could have instead?” This is the question that Econs ask, and with this question there is no endowment effect, because the asymmetry between the pleasure of getting and the pain of giving up is irrelevant.


• * People who are poor think like traders, but the dynamics are quite different. Unlike traders, the poor are not indifferent to the differences between gaining and giving up. Their problem is that all their choices are between losses. Money that is spent on one good is the loss of another good that could have been purchased instead. For the poor, costs are losses.


• Some experimenters have reported that an angry face “pops out” of a crowd of happy faces, but a single happy face does not stand out in an angry crowd. The brains of humans and other animals contain a mechanism that is designed to give priority to bad news.


• * “Bad emotions, bad parents, and bad feedback have more impact than good ones, and bad information is processed more thoroughly than good. The self is more motivated to avoid bad self-definitions than to pursue good ones. Bad impressions and bad stereotypes are quicker to form and more resistant to disconfirmation than good ones.”... Gottman estimated that a stable relationship requires that good interactions outnumber bad interactions by at least 5 to 1. Other asymmetries in the social domain are even more striking. We all know that a friendship that may take years to develop can be ruined by a single action.


• the daily goal: Economic logic implies that cabdrivers should work many hours on rainy days and treat themselves to some leisure on mild days, when they can “buy” leisure at a lower price. The logic of loss aversion suggests the opposite: drivers who have a fixed daily target will work many more hours when the pickings are slim


• Loss aversion creates an asymmetry that makes agreements difficult to reach. The concessions you make to me are my gains, but they are your losses; they cause you much more pain than they give me pleasure. Inevitably, you will place a higher value on them than I do. The same is true, of course, of the very painful concessions you demand from me, which you do not appear to value sufficiently! Negotiations over a shrinking pie are especially difficult, because they require an allocation of losses.


• * Remarkably, altruistic punishment is accompanied by increased activity in the “pleasure centers” of the brain. It appears that maintaining the social order and the rules of fairness in this fashion is its own reward. Altruistic punishment could well be the glue that holds societies together. However, our brains are not designed to reward generosity as reliably as they punish meanness.


• The offer is lower (by $40,000!) than the expected value of waiting for the judgment (which is $950,000), but are you quite sure you would want to reject it? If such an event actually happens in your life, you should know that a large industry of “structured settlements” exists to provide certainty at a hefty price, by taking advantage of the certainty effect.


• The possibility effect in the bottom left cell explains why lotteries are popular. When the top prize is very large, ticket buyers appear indifferent to the fact that their chance of winning is minuscule. A lottery ticket is the ultimate example of the possibility effect. Without a ticket you cannot win <> The bottom right cell is where insurance is bought. People are willing to pay much more for insurance than expected value... Many unfortunate human situations unfold in the top right cell. This is where people who face very bad options take desperate gambles, accepting a high probability of making things worse in exchange for a small hope of avoiding a large loss.


• settling for a modest amount is equivalent to purchasing insurance against the unlikely event of a bad verdict. The shoe is now on the other foot: the plaintiff is willing to gamble and the defendant wants to be safe. Plaintiffs with frivolous claims are likely to obtain a more generous settlement than the statistics of the situation justify.


• My experience illustrates how terrorism works and why it is so effective: it induces an availability cascade. An extremely vivid image of death and damage, constantly reinforced by media attention and frequent conversations,


• *  In prospect theory, variations of probability have less effect on decision weights. An experiment that I mentioned earlier found that the decision weight for a 90% chance was 71.2 and the decision weight for a 10% chance was 18.6. The ratio of the probabilities was 9.0, but the ratio of the decision weights was only 3.83, indicating insufficient sensitivity to probability in that range.


• that the fear of an impending electric shock was essentially uncorrelated with the probability of receiving the shock. The mere possibility of a shock triggered the full-blown fear response.


• The second statement does something to your mind that the first does not: it calls up the image of an individual child who is permanently disabled by a vaccine; the 999,999 safely vaccinated children have faded into the background. As predicted by denominator neglect, low-probability events are much more heavily weighted when described in terms of relative frequencies (how many) than when stated in more abstract terms of “chances,” “risk,” or “probability” (how likely). As we have seen, System 1 is much better at dealing with individuals than categories.


• Experienced traders in financial markets live by it every day, shielding themselves from the pain of losses by broad framing. As was mentioned earlier, we now know that experimental subjects could be almost cured of their loss aversion (in a particular context) by inducing them to “think like a trader,”... The combination of loss aversion and narrow framing is a costly curse. Individual investors can avoid that curse, achieving the emotional benefits of broad framing while also saving time and agony, by reducing the frequency with which they check how well their investments are doing... In addition to improving the emotional quality of life, the deliberate avoidance of exposure to short-term outcomes improves the quality of both decisions and outcomes.


• This short example illustrates a broad story: people expect to have stronger emotional reactions (including regret) to an outcome that is produced by action than to the same outcome when it is produced by inaction.


• Sunstein points out, the precautionary principle is costly, and when interpreted strictly it can be paralyzing. He mentions an impressive list of innovations that would not have passed the test, including “airplanes, air conditioning, antibiotics, automobiles, chlorine, the measles vaccine, open-heart surgery, radio, refrigeration, smallpox vaccine, and X-rays.” The strong version of the precautionary principle is obviously untenable. But enhanced loss aversion is embedded in a strong and widely shared moral intuition; it originates in System 1. The dilemma between intensely loss-averse moral attitudes and efficient risk management does not have a simple and compelling solution.


• My personal hindsight-avoiding policy is to be either very thorough or completely casual when making a decision with long-term consequences. Hindsight is worse when you think a little, just enough to tell yourself later, “I almost made a better choice.”


• * Their recommendation is that you should not put too much weight on regret; even if you have some, it will hurt less than you now think.


• There is another sense of meaning, in which “Italy won” and “France lost” do not have the same meaning at all... The fact that logically equivalent statements evoke different reactions makes it impossible for Humans to be as reliably rational as Econs.


• But the experience was not actually ruined, only the memory of it. The experiencing self had had an experience that was almost entirely good, and the bad end could not undo it, because it had already happened. My questioner had assigned the entire episode a failing grade because it had ended very badly, but that grade effectively ignored 40 minutes of musical bliss.


• * duration neglect and the peak-end rule: Caring for people often takes the form of concern for the quality of their stories, not for their feelings. Indeed, we can be deeply moved even by events that change the stories of people who are already dead... Most important, of course, we all care intensely for the narrative of our own life and very much want it to be a good story, with a decent hero.


• * Here again, my informal observation is that most people are remarkably indifferent to the pains of their experiencing self. Some say they don’t care at all. Others share my feeling, which is that I feel pity for my suffering self but not more than I would feel for a stranger in pain. Odd as it may seem, I am my remembering self, and the experiencing self, who does my living, is like a stranger to me.


• We found that French and American women spent about the same amount of time eating, but for Frenchwomen, eating was twice as likely to be focal as it was for American women. The Americans were far more prone to combine eating with other activities, and their pleasure from eating was correspondingly diluted.


• * Nothing in life is as important as you think it is when you are thinking about it... Adaptation to a new situation, whether good or bad, consists in large part of thinking less and less about it.


• Should investments be guided by the suffering that patients actually experience? Or should they follow the intensity of the patients’ desire to be relieved from their condition and by the sacrifices that they would be willing to make to achieve that relief? The ranking of blindness and deafness, or of colostomy and dialysis, might well be different depending on which measure of the severity of suffering is used.


• The only test of rationality is not whether a person’s beliefs and preferences are reasonable, but whether they are internally consistent. A rational person can believe in ghosts so long as all her other beliefs are consistent with the existence of ghosts. A rational person can prefer being hated over being loved, so long as his preferences are consistent. Rationality is logical coherence—reasonable or not. Econs are rational by this definition, but there is overwhelming evidence that Humans cannot be. An Econ would not be susceptible to priming, WYSIATI, narrow framing, the inside view, or preference reversals, which Humans cannot consistently avoid.


• I often cringe when my work with Amos is credited with demonstrating that human choices are irrational, when in fact our research only showed that Humans are not well described by the rational-agent model.


• A world in which firms compete by offering better products is preferable to one in which the winner is the firm that is best at obfuscation. <> A remarkable feature of libertarian paternalism is its appeal across a broad political spectrum.