Thinking, fast and slow

I recently finished reading Thinking Fast & Slow, a book on behavioral psychology và decision-making by Daniel Kahneman. This book contains some profoundly important concepts around how people make decisions. It will help you understand why humans sometimes make errors in judgement, và how to look for signs that you yourself may be about khổng lồ make a System 1 error. Here are some of the most important take-aways from the book.

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We have a Two System way of thinking — System 1 (Thinking Fast), và System 2 (Thinking Slow).

System 1 is the intuitive, “gut reaction” way of thinking and making decisions. System 2 is the analytical, “critical thinking” way of making decisions. System 1 forms “first impressions” & often is the reason why we jump to lớn conclusions. System 2 does reflection, problem-solving, và analysis.

We spend most of our time in System 1.

Most of us identify with System 2 thinking. We consider ourselves rational, analytical human beings. Thus, we think we spend most of our time engaged in System 2 thinking.

Actually, we spend almost all of our daily lives engaged in System 1 (Thinking Fast). Only if we encounter something unexpected, or if we make conscious effort, do we engage System 2 (Thinking Slow). Kahneman wrote:

“Systems 1 and 2 are both active whenever we are awake. System 1 runs automatically & System 2 is normally in comfortable low-effort mode, in which only a fraction of its capacity is engaged. System 1 continuously generates suggestions for System 2: impressions, intuitions, intentions, and feelings. If endorsed by System 2, impressions và intuitions turn into beliefs, và impulses turn into voluntary actions. When all goes smoothly, which is most of the time, System 2 adopts the suggestions of System 1 with little or no modification. You generally believe your impressions & act on your desires, and that is fine — usually.

“When System 1 runs into difficulty, it calls on System 2 to tư vấn more detailed & specific processing that may solve the problem of the moment. System 2 is mobilized when a question arises for which System 1 does not offer an answer… System 2 is activated when an event is detected that violates the model of the world that System 1 maintains.”

So System 1 is continuously creating impressions, intuitions, và judgments based on everything we are sensing. In most cases, we just go with the impression or intuition that System 1 generates. System 2 only gets involved when we encounter something unexpected that System 1 can’t automatically process.

System 1 thinking seeks a coherent story above all else, and often leads us lớn jump to lớn conclusions.

While System 1 is generally very accurate, there are situations where it can make errors of bias. System 1 sometimes answers easier questions than it was asked, and it has little knowledge of xúc tích và ngắn gọn and statistics.

One of the biggest problems with System 1 is that it seeks to lớn quickly create a coherent, plausible story — an explanation for what is happening — by relying on associations & memories, pattern-matching, and assumptions. & System 1 will mặc định to that plausible, convenient story — even if that story is based on incorrect information.

“The measure of success for System 1 is the coherence of the story it manages lớn create. The amount and chất lượng of the data on which the story is based are largely irrelevant. When information is scarce, which is a common occurrence, System 1 operates as a machine for jumping to lớn conclusions.”

WYSIATI: What you see is all there is.
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Kahneman writes extensively about the phenomenon of how people jump to lớn conclusions on the basis of limited information. He has an abbreviation for this phenomenon — WYSIATI — “what you see is all there is.” WYSIATI causes us khổng lồ “focus on existing evidence and ignore absent evidence.” As a result of WYSIATI, System 1 often quickly creates a coherent & believable story based on limited evidence. These impressions và intuitions can then be endorsed by System 2 & turn into deep-rooted values and beliefs. WYSIATI can cause System 1 to “infer & invent causes và intentions,” whether or not those causes or intentions are true.

“System 1 is highly adept in one khung of thinking — it automatically and effortlessly identifies causal connections between events, sometimes even when the connection is spurious.”

This is the reason why people jump khổng lồ conclusions, assume bad intentions, give in khổng lồ prejudices or biases, và buy into conspiracy theories. They focus on limited available evidence và do not consider absent evidence. They invent a coherent story, causal relationships, or underlying intentions. & then their System 1 quickly forms a judgment or impression, which in turn gets quickly endorsed by System 2.

As a result of WYSIATI and System 1 thinking, people may make wrong judgments & decisions due to lớn biases & heuristics.

There are several potential errors in judgment that people may make when they over-rely on System 1 thinking:

Law of small numbers: People don’t understand statistics very well. As a result, they may look at the results of a small sample — e.g. 100 people responding to lớn a survey — & conclude that it’s representative of the population. This also explains why people jump khổng lồ conclusions with just a few data points or limited evidence. If three people said something, then maybe it’s true? If you personally observe one incident, you are more likely to generalize this occurrence khổng lồ the whole population.Assigning cause khổng lồ random chance: As Kahneman wrote, “statistics produce many observations that appear to beg for causal explanations but vì not lend themselves khổng lồ such explanations. Many facts of the world are due khổng lồ chance, including accidents of sampling. Causal explanations of chance events are inevitably wrong.”Illusion of understanding: People often create flawed explanations for past events, a phenomenon known as narrative fallacy. These “explanatory stories that people find compelling are simple; are concrete rather than abstract; assign a larger role to lớn talent, stupidity, and intentions than to lớn luck; và focus on a few striking events that happened rather than on the countless events that failed khổng lồ happen… Good stories provide a simple and coherent trương mục of people’s actions and intentions. You are always ready lớn interpret behavior as a manifestation of general propensities và personality traits — causes that you can readily match lớn effects.”Hindsight bias: People will reconstruct a story around past events lớn underestimate the extent to which they were surprised by those events. This is a “I-knew-it-all-along” bias. If an event comes to pass, people exaggerate the probability that they knew it was going lớn occur. If an event does not occur, people erroneously recall that they thought it was unlikely.

“Hindsight bias has pernicious effects on the evaluations of decision makers. It leads observers khổng lồ assess the unique of a decision not by whether the process was sound, but by whether its outcome was good or bad… We are prone khổng lồ blame decision makers for good decisions that worked out badly & to give them too little credit for successful moves that appear obvious only after the fact… When the outcomes are bad, often blame for not seeing the handwriting on the wall… Actions that seemed prudent in foresight can look irresponsibly negligent in hindsight.”

Confirmation bias: Within WYSIATI, people will be quick lớn seize on limited evidence that confirms their existing perspective. And they will ignore or fail lớn seek evidence that runs contrary khổng lồ the coherent story they have already created in their mind.Overconfidence: Due khổng lồ the illusion of understanding and WYSIATI, people may become overconfident in their predictions, judgments, và intuitions. “We are confident when the story we tell ourselves comes easily lớn mind, with no contradiction và no competing scenario… A mind that follows WYSIATI will achieve high confidence much too easily by ignoring what it does not know. If is therefore not surprising that many of us are prone khổng lồ have high confidence in unfounded intuitions.”Over-optimism: People have a tendency khổng lồ create plans và forecasts that are “unrealistically close to best-case scenarios.” When forecasting the outcomes of risky projects, people tend to make decisions “based on delusional optimism rather than on a rational weighting of gains, losses, và probabilities. They overestimate benefits và underestimate costs. They spin scenarios of success while overlooking the potential for mistakes & miscalculations… In this view, people often (but not always) take on risky projects because they are overly optimistic about the odds.”

There are many other heuristics and biases that Kahneman describes, including those around evaluating risk & losses.

What did we learn?

System 1 (Thinking Fast) often leads individuals to lớn make snap judgments, jump to lớn conclusions, & make erroneous decisions based on biases & heuristics.System 1 is always-on, và constantly producing fast impressions, intuitions, and judgments. System 2 is used for analysis, problem-solving, & deeper evaluations.Most of the time, we go with System 1 recommendations because of cognitive ease. Sometimes, we evoke System 2 when we see something unexpected, or we make a conscious effort to slow down our thinking to lớn take a critical view.System 1 seeks khổng lồ produce a coherent & believable story based on available information. This often leads us to lớn WYSIATI — focusing on the limited available evidence, and ignoring important but absent evidence. WYSIATI can lead us to lớn jump lớn conclusions about people’s intentions, to lớn assign causal relationships when there were none, & to form snap (but incorrect) judgments and impressions.WYSIATI & System 1 thinking can lead khổng lồ a number of judgment biases, including The Law of Small Numbers, assigning cause khổng lồ chance, hindsight bias, & overconfidence.

Reading this book has had a profound impact on my own worldview. In the past, I have been taken aback when I observed that someone was “assuming the worst intentions of others.” I have also struggled to understand how someone could create in their mind such a different narrative of past events, despite seeing the same evidence that I had seen. And finally, I have sometimes been shocked by the biases, prejudices và “snap judgments” I have seen from others. Thinking Fast & Slow has given me a new perspective on these behaviors & judgments.

I can now apply some of this knowledge to situations where I see people (or when I catch myself) relying too much on System 1 thinking. We will never be able to lớn avoid relying on System 1 thinking for most of our daily lives. The important thing is lớn recognize when I or when others are relying on it too much, & force more System 2 thinking into the situation.