Kahnemans Rational Economic Model

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Kahnemans Rational Economic Model

Add some now ». My long-standing failure to What Is 12 Angry Men Circumstantial Evidence specific benefits to the concept of representativeness was a revealing mistake. Here are 57 titles to get you started. Retrieved February 17, Yet our default position is to simply go with our intuition unless we Forensic Science Case Study a strong reason to believe our intuition is misleading. Dec 11, Ethical Ouroboros Tattoos Rice rated Macbeth Good Vs Evil it Tom Sawyer Summary amazing Shelves: favorites-best-bookspsychologyTom Sawyer Summary.

The riddle of experience vs. memory - Daniel Kahneman

The result would have been less crisp, less provocative, and ultimately less defensible. As it was, we offered a progress report on our study of judgment under uncertainty, which included much solid evidence. All inferences about human rationality were drawn by the readers themselves. The conclusions that readers drew were often too strong, mostly because existential quantifiers, as they are prone to do, disappeared in the transmission. Whereas we had shown that some, not all judgments about uncertain events are mediated by heuristics, which sometimes, not always produce predictable biases, we were often read as having claimed that people cannot think straight.

The fact that men had walked on the moon was used more than once as an argument against our position. Because our treatment was mistakenly taken to be inclusive, our silences became significant. For example, the fact that we had written nothing about the role of social factors in judgment was taken as an indication that we thought these factors were unimportant. I suppose that we could have prevented at least some of these misunderstandings, but the cost of doing so would have been too high. The interpretation of our work as a broad attack on human rationality — rather than as a critique of the rational-agent model — attracted much opposition, some quite harsh and dismissive. Some of the critiques were normative, arguing that we compared judgments to inappropriate normative standards Cohen, ; Gigerenzer, , We were also accused of spreading a tendentious and misleading message that exaggerated the flaws of human cognition Lopes, , and many others.

Some authors dismissed the research as a collection of artificial puzzles designed to fool undergraduates. A young colleague and I recently reviewed the experimental literature, and concluded that the empirical controversy about the reality of cognitive illusions dissolves when viewed in the perspective of a dual-process model Kahneman and Frederick, The essence of such a model is that judgments can be produced in two ways and in various mixtures of the two : a rapid, associative, automatic, and effortless intuitive process sometimes called System 1 , and a slower, rule-governed, deliberate and effortful process System 2 Sloman, ; Stanovich and West, Thus, errors of intuition occur when two conditions are satisfied: System 1 generates the error and System 2 fails to correct.

They tell us little about the intuitive judgments that are suppressed. If the controversy is so simply resolved, why was it not resolved in , or in ? The answer that Frederick and I proposed refers to the conversational context in which the early work was done:. A comprehensive psychology of intuitive judgment cannot ignore such controlled thinking, because intuition can be overridden or corrected by self-critical operations, and because intuitive answers are not always available. But this sensible position seemed irrelevant in the early days of research on judgment heuristics. They believed that including easy questions in the design would insult the participants and bore the readers.

More generally, the early studies of heuristics and biases displayed little interest in the conditions under which intuitive reasoning is preempted or overridden — controlled reasoning leading to correct answers was seen as a default case that needed no explaining. Kahneman and Frederick, , p. What happened, I suppose, is that because the paper was influential it altered the context in which it was read in subsequent years. Its being misunderstood was a direct consequence of its being taken seriously. I wonder how often this occurs. Amos and I always dismissed the criticism that our focus on biases reflected a generally pessimistic view of the human mind.

We argued that this criticism confuses the medium of bias research with a message about rationality. This confusion was indeed common. In one of our demonstrations of the availability heuristic, for example, we asked respondents to compare the frequency with which some letters appeared in the first and in the third position in words. We selected letters that in fact appeared more frequently in the third position, and showed that even for these letters the first position was judged more frequent, as would be predicted on the idea that it is easier to search through a mental dictionary by the first letter.

The experiment was used by some critics as an example of our own confirmation bias, because we had demonstrated availability only in cases in which this heuristic led to bias. But this criticism assumes that our aim was to demonstrate biases, and misses the point of what we were trying to do. Our aim was to show that the availability heuristic controls frequency estimates even when that heuristic leads to error — an argument that cannot be made when the heuristic leads to correct responses, as it often does. There is no denying, however, that the name of our method and approach created a strong association between heuristics and biases, and thereby contributed to giving heuristics a bad name, which we did not intend.

I recently came to realize that the association of heuristics and biases has affected me as well. Judging probability by representativeness is indeed associated with systematic errors. But a large component of the process is the judgment of representativeness, and that judgment is often subtle and highly skilled. The undergraduate who instantly recognizes that enjoyment of puns is more representative of a computer scientist than of an accountant is also exhibiting high skill in a social and cultural judgment. My long-standing failure to associate specific benefits to the concept of representativeness was a revealing mistake. What did I learn from the controversy about heuristics and biases?

Like most protagonists in debates, I have few memories of having changed my mind under adversarial pressure, but I have certainly learned more than I know. For example, I am now quick to reject any description of our work as demonstrating human irrationality. When the occasion arises, I carefully explain that research on heuristics and biases only refutes an unrealistic conception of rationality, which identifies it as comprehensive coherence. Was I always so careful? Probably not. In my current view, the study of judgment biases requires attention to the interplay between intuitive and reflective thinking, which sometimes allows biased judgments and sometimes overrides or corrects them.

Was this always as clear to me as it is now? Finally, I am now very impressed by the observation I mentioned earlier, that the most highly skilled cognitive performances are intuitive, and that many complex judgments share the speed, confidence and accuracy of routine perception. This observation is not new to me, but did it always loom as large in my views as it now does? Almost certainly not. As my obvious struggle with this topic reveals, I thoroughly dislike controversies where it is clear that no minds will be changed. I feel diminished by losing my objectivity when in point-scoring mode, and downright humiliated when I get angry. Indeed, my phobia for professional anger is such that I have allowed myself for many years the luxury of refusing to referee papers that might arouse that emotion: If the tone is snide, or the review of the facts more tendentious than normal, I return the paper back to the editor without commenting on it.

I consider myself fortunate not to have had too many of the nasty experiences of professional quarrels, and am grateful for the occasional encounters with open minds across lines of sharp debate Ayton, ; Klein, Prospect theory After the publication of our paper on judgment in Science in , Amos suggested that we study decision-making together. This was a field in which he was already an established star, and about which I knew very little. Utility theory and the paradoxes of Allais and Ellsberg were discussed in the book, along with some of the classic experiments in which major figures in the field had joined in an effort to measure the utility function for money by eliciting choices between simple gambles.

The subjective non-linearity is obvious: the difference between probabilities of. The difficulty and the paradox exist only for decision theorists, because the non-linear response to probability produces preferences that violate compelling axioms of rational choice and are therefore incompatible with standard expected utility theory. The natural response of a decision theorist to the Allais paradox, certainly in and probably even today, would be to search for a new set of axioms that have normative appeal and yet permit the non-linearity.

The natural response of psychologists was to set aside the issue of rationality and to develop a descriptive theory of the preferences that people actually have, regardless of whether or not these preferences can be justified. The task we set for ourselves was to account for observed preferences in the quaintly restricted universe within which the debate about the theory of choice has traditionally been conducted: monetary gambles with few outcomes all positive , and definite probabilities. This was an empirical question, and data were needed. Amos and I solved the data collection problem with a method that was both efficient and pleasant. We spent our hours together inventing interesting choices and examining our preferences.

If we agreed on the same choice we provisionally assumed that other people would also accept it, and we went on to explore its theoretical implications. This unusual method enabled us to move quickly, and we constructed and discarded models at a dizzying rate. I have a distinct memory of a model that was numbered 37, but cannot vouch for the accuracy of our count. As was the case in our work on judgment, our central insights were acquired early and, as was the case in our work on judgment, we spent a vast amount of time and effort before publishing a paper that summarized those insights Kahneman and Tversky, When reading the mathematical psychology textbook, I was puzzled by the fact that all the choice problems were described in terms of gains and losses actually, almost always gains , whereas the utility functions that were supposed to explain the choices were drawn with wealth as the abscissa.

This seemed unnatural, and psychologically unlikely. We had no inkling that this obvious move was truly fundamental, or that it would open the path to behavioral economics. Harry Markowitz, who won the Nobel Prize in economics in , had proposed changes of wealth as carriers of utility in , but he did not take this idea very far. The shifts from wealth to changes of wealth as carriers of utility is significant because of a property of preferences that we later labeled loss-aversion : the response to losses is consistently much more intense than the response to corresponding gains, with a sharp kink in the value function at the reference point.

The concept of loss aversion was, I believe, our most useful contribution to the study of decision making. Loss aversion also helps explain why real-estate markets dry up for long periods when prices are down, and it contributes to the explanation of a widespread bias favoring the status quo in decision making. Finally, the asymmetric consideration of gains and losses extends to the domain of moral intuitions, in which imposing losses and failing to share gains are evaluated quite differently.

But of course, none of that was visible to Amos and me when we first decided to assume a kinked value function — we needed that kink to account for choices between gambles. Another set of early insights came when Amos suggested that we flip the signs of outcomes in the problems we had been considering. The result was exciting. We were not the first to observe this pattern.

Raiffa and Williams knew about the prevalence of risk-seeking in the negative domain. But ours was apparently the first serious attempt to make something of it. We then spent about three years polishing it, until we were ready to submit the article for publication. Our effort during those years was divided between the tasks of exploring interesting implications of our theoretical formulation and developing answers to all plausible objections. The most novel idea of prospect theory occurred to us in that defensive context. It came quite late, as we were preparing the final version of the paper. The prediction is wrong, of course, because most decision makers will spontaneously transform the former prospect into the latter and treat them as equivalent in subsequent operations of evaluation and choice.

To eliminate the problem we proposed that decision-makers, prior to evaluating the prospects, perform an editing operation that collects similar outcomes and adds their probabilities. We went on to propose several other editing operations that provided an explicit and psychologically plausible defense against a variety of superficial counter-examples to the core of the theory. We had succeeded in making life quite difficult for that pedantic graduate student. But we had also made a truly significant advance, by making it explicit that the objects of choice are mental representations, not objective states of the world.

This was a large step toward the development of a concept of framing, and eventually toward a new critique of the model of the rational agent. This was probably wise. I looked at the draft recently, and was struck by how similar it is to the paper that was eventually published, and also by how different the two papers are. Most of the key ideas, most of the key examples, and much of the wording were there in the early draft. But that draft lacks the authority that was gained during the years that we spent anticipating objections.

We published the paper in Econometrica. The choice of venue turned out to be important; the identical paper, published in Psychological Review , would likely have had little impact on economics. But our decision was not guided by a wish to influence economics. Econometrica just happened to be the journal where the best papers on decision-making to date had been published, and we were aspiring to be in that company. And there was another way in which the impact of prospect theory depended crucially on the medium, as well as the message. Prospect theory was a formal theory, and its formal nature was the key to the impact it had in economics. Every discipline of social science, I believe, has some ritual tests of competence, which must be passed before a piece of work is considered worthy of attention.

Such tests are necessary to prevent information overload, and they are also important aspects of the tribal life of the disciplines. In particular, they allow insiders to ignore just about anything that is done by members of other tribes, and to feel no scholarly guilt about doing so. To serve this screening function efficiently, the competence tests usually focus on some aspect of form or method, and have little or nothing to do with substance. Prospect theory passed such a test in economics, and its observations became a legitimate though optional part of the scholarly discourse in that discipline.

It is a strange and rather arbitrary process that selects some pieces of scientific writing for relatively enduring fame while committing most of what is published to almost immediate oblivion. Framing and mental accounting Amos and I completed prospect theory during the academic year of to , which I spent at the Center for Advanced Studies at Stanford, while he was visiting the psychology department there.

Around that time, we began work on our next project, which became the study of framing. This was also the year in which the second most important professional friendship in my life — with Richard Thaler — had its start. A framing effect is demonstrated by constructing two transparently equivalent versions of a given problem, which nevertheless yield predictably different choices. In this version, people prefer the program that will save lives for sure.

In this formulation most people prefer the gamble. If the same respondents are given the two problems on separate occasions, many give incompatible responses. When confronted with their inconsistency, people are quite embarrassed. They are also quite helpless to resolve the inconsistency, because there are no moral intuitions to guide a choice between different sizes of a surviving population. Amos and I began creating pairs of problems that revealed framing effects while working on prospect theory.

We used them to show sensitivity to gains and losses as in the lives example , and to illustrate the inadequacy of a formulation in which the only relevant outcomes are final states. In that article, we also showed that a single-stage gamble could be rearranged as a two-stage gamble in a manner that left the bottom-line probabilities and outcomes unchanged but reversed preferences. Later, we developed examples in which respondents are asked to make simultaneous choices in two problems, A and B. One of the problems involves gains and elicits a risk-averse choice; the other problem involves losses and elicits risk-seeking. A majority of respondents made both these choices. However, the problems were constructed so that the combination of choices that people made was actually dominated by the combination of the options they had rejected.

These are not parlor-game demonstrations of human stupidity. The ease with which framing effects can be demonstrated reveals a fundamental limitation of the human mind. Framing effects violate that basic requirement: the respondents who exhibit susceptibility to framing effects wish their minds were able to avoid them. We were able to conceive of only two kinds of mind that would avoid framing effects: 1 If responses to all outcomes and probabilities were strictly linear, the procedures that we used to produce framing effects would fail. Both conditions are obviously impossible. Framing effects violate a basic requirement of rationality which we called invariance Kahneman and Tversky, and Arrow called extensionality.

It took us a long time and several iterations to develop a forceful statement of this contribution to the rationality debate, which we presented several years after our framing paper Tversky and Kahneman, Another advance that we made in our first framing article was the inclusion of riskless choice problems among our demonstrations of framing. In making that move, we had help from a new friend. Richard Thaler was a young economist, blessed with a sharp and irreverent mind. While still in graduate school, he had trained his ironic eye on his own discipline and had collected a set of pithy anecdotes demonstrating obvious failures of basic tenets of economic theory in the behavior of people in general — and of his very conservative professors in Rochester in particular.

Dick realized that the endowment effect, which is a genuine puzzle in the context of standard economic theory, is readily explained by two assumptions derived from prospect theory. First, the carriers of utility are not states owning or not owning the wine , but changes — getting the wine or giving it up. And giving up is weighted more than getting, by loss aversion. The endowment effect was not the only thing we learned from Dick. Dick showed how people segregate their decisions into separate accounts, then struggle to keep each of these accounts in the black.

One of his compelling examples was the couple who drove through a blizzard to a basketball game because they had already paid for the tickets, though they would have stayed at home if the tickets had been free. People report that they would be very likely still to buy a ticket if they had lost the cash, presumably because the loss has been charged to general revenue. On the other hand, they describe themselves as quite likely to go home if they have lost an already purchased ticket, presumably because they do not want to pay twice to see the same show. Behavioral economics Our interaction with Thaler eventually proved to be more fruitful than we could have imagined at the time, and it was a major factor in my receiving the Nobel Prize.

Although I do not wish to renounce any credit for my contribution, I should say that in my view the work of integration was actually done mostly by Thaler and the group of young economists that quickly began to form around him, starting with Colin Camerer and George Loewenstein, and followed by the likes of Matthew Rabin, David Laibson, Terry Odean, and Sendhil Mullainathan. Amos and I provided quite a few of the initial ideas that were eventually integrated into the thinking of some economists, and prospect theory undoubtedly afforded some legitimacy to the enterprise of drawing on psychology as a source of realistic assumptions about economic agents.

But the founding text of behavioral economics was the first article in which Thaler presented a series of vignettes that challenged fundamental tenets of consumer theory. In , Amos and I attended a meeting of the Cognitive Science Society in Rochester, where we had a drink with Eric Wanner, a psychologist who was then vice-president of the Sloan Foundation.

Eric told us that he was interested in promoting the integration of psychology and economics, and asked for our advice on ways to go about it. I have a clear memory of the answer we gave him. We also thought that it was pointless to encourage psychologists to make themselves heard by economists, but that it could be useful to encourage and support the few economists who were interested in listening. The first grant that he made in that program was for Dick Thaler to spend an academic year visiting me at the University of British Columbia, in Vancouver. That year was one of the best in my career. We worked as a trio that also included the economist Jack Knetsch, with whom I had already started constructing surveys on a variety of issues, including valuation of the environment and public views about fairness in the marketplace.

Jack had done experimental studies of the endowment effect and had seen the implications of that effect for the Coase theorem and for issues of environmental policy. We did a lot together that year. We also conducted multiple surveys in which we used experimentally varied vignettes to identify the rules of fairness that the public would apply to merchants, landlords, and employers Kahneman, Knetsch and Thaler, a. Our central observation was that in many contexts the existing situation e.

For example, cutting the wages of an employee merely because he could be replaced by someone who would accept a lower wage is unfair, although paying a lower wage to the replacement of an employee who quit is entirely acceptable. We submitted the paper to the American Economic Review and were utterly surprised by the outcome: the paper was accepted without revision. Luckily for us, the editor had asked two economists quite open to our approach to review the paper. We later learned that one of the referees was George Akerlof and the other was Alan Olmstead, who had studied the failures of markets to clear during an acute gas shortage.

We decided to investigate these ideas using experiments for real stakes. The games that we invented for this purpose have become known as the ultimatum game and the dictator game. Alas, while writing up our second paper on fairness Kahneman, Knetsch and Thaler, b we learned that we had been scooped on the ultimatum game by Werner Guth and his colleagues, who had published experiments using the same design a few years earlier.

I remember being quite crestfallen when I learned this. I would have been even more depressed if I had known how important the ultimatum game would eventually become. Most of the economics I know I learned that year, from Jack and Dick, my two willing teachers, and from what was in fact my first experience of communicating across tribal boundaries. The game is played by a group of, say, fifteen people. We played the game a few times, once with the faculty of the psychology department at U. The results, although not surprising to an economist, struck me as magical.

The group was doing the right thing collectively, although conversations with the participants and the obvious statistical analyses did not reveal any consistent strategies that made sense. It took me some time to realize that the magic we were observing was an equilibrium: the pattern we saw existed because no other pattern could be sustained. This idea had not been in my intellectual bag of tools. That was the closest my research ever came to core economics, and since that time I have been mostly cheering Thaler and behavioral economics from the sidelines. There has been much to cheer about. As a mark of the progress that has been made, I recall a seminar in psychology and economics that I co-taught with George Akerlof, after Anne Treisman and I had moved from the University of British Columbia to Berkeley in I remember being struck by the reverence with which the rationality assumption was treated even by a free thinker such as George, and also by his frequent warnings to the students that they should not let themselves be seduced by the material we were presenting, lest their careers be permanently damaged.

This opinion was quite common at the time. When Matthew Rabin joined the Berkeley economics department as a young assistant professor and chose to immerse himself in psychology, many considered the move professional suicide. Eric Wanner and the Russell Sage Foundation continued to support behavioral economics over the years. I was instrumental in the idea of using some of that support to set up a summer school for graduate students and young faculty in that field, and I helped Dick Thaler and Colin Camerer organize the first one, in When the fifth summer school convened in , David Laibson, who had been a participant in , was tenured at Harvard and was one of the three organizers.

Terrance Odean and Sendhil Mullainathan, who had also participated as students, came back to lecture as successful researchers with positions in two of the best universities in the world. It was a remarkable experience to hear Matthew Rabin teach a set of guidelines for developing theories in behavioral economics — including the suggestion that the standard economic model should be a special case of the more complex and general models that were to be constructed.

We had come a long way. Although behavioral economics has enjoyed much more rapid progress and gained more respectability in economics than appeared possible fifteen years ago, it is still a minority approach and its influence on most fields of economics is negligible. Many economists believe that it is a passing fad, and some hope that it will be. The future may prove them right. But many bright young economists are now betting their careers on the expectation that the current trend will last. And such expectations have a way of being self-fulfilling. Later years Anne Treisman and I married and moved together to U. Amos and I were then at the peak of our joint game, and completely committed to our collaboration. For a few years, we managed to maintain it, by spending every second weekend together and by placing multiple phone calls each day, some lasting several hours.

But eventually the goose that had laid the golden eggs languished, and our collaboration tapered off. Although this outcome now appears inevitable, it came as a painful surprise to us. We had completely failed to appreciate how critically our successful interaction had depended on our being together at the birth of every significant idea, on our rejection of any formal division of labor, and on the infinite patience that became a luxury when we could meet only periodically.

We struggled for years to revive the magic we had lost, but in vain. We were again trying when Amos died. When he learned in the early months of that he had only a few months to live, we decided to edit a joint book on decision-making that would cover some of the progress that had been made since we had started working together on the topic more than twenty years before Kahneman and Tversky, We planned an ambitious preface as a joint project, but I think we both knew from the beginning that we would not be granted enough time to complete it.

The preface I wrote alone was probably my most painful writing experience. During the intervening years, of course, we had continued to work, sometimes together sometimes with other collaborators. Amos took the lead in our most important joint piece, an extension of prospect theory to the multipleoutcome case in the spirit of rank-dependent models. He also carried out spectacular studies of the role of argument and conflict in decision-making, in collaborations with Eldar Shafir and with Itamar Simonson, as well as influential work on violations of procedural invariance in collaborations with Shmuel Sattath and with Paul Slovic. He engaged in a deep exploration of the mathematical structure of decision theories with Peter Wakker.

And, in his last years, Amos was absorbed in the development of support theory, a general approach to thinking under uncertainty that his students have continued to explore. These are only his major programmatic research efforts in the field of decision-making — he did much more. I, too, kept busy, and also kept moving. Moving East also made it easier to maintain frequent contacts with friends, children and adored grandchildren in Israel. Over the years I enjoyed productive collaborations with Dale Miller in the development of a theory of counterfactual thinking Kahneman and Miller, , and with Anne Treisman, in studies of visual attention and object perception.

In addition to the work on fairness and on the endowment effect that we did with Dick Thaler, Jack Knetsch and I carried out studies of the valuation of public goods that became quite controversial and had a great influence on my own thinking. Further studies of that problem with Ilana Ritov eventually led to the idea that the translation of attitudes into dollars involves the almost arbitrary choice of a scale factor, leading some people who have quite similar values to state very different values of their willingness to pay, for no good reason Kahneman, Ritov and Schkade, With David Schkade and the famous jurist Cass Sunstein I extended this idea into a program of research on arbitrariness in punitive damage decisions, which may yet have some influence on policy Sunstein, Kahneman, Schkade and Ritov, The focus of my research for the past fifteen years has been the study of various aspects of experienced utility — the measure of the utility of outcomes as people actually live them.

The concept of utility in which I am interested was the one that Bentham and Edgeworth had in mind. However, experienced utility largely disappeared from economic discourse in the twentieth century, in favor of a notion that I call decision utility, which is inferred from choices and used to explain choices. The distinction could be of little relevance for fully rational agents, who presumably maximize experienced utility as well as decision utility. But if rationality cannot be assumed, the quality of consequences becomes worth measuring and the maximization of experienced utility becomes a testable proposition. Indeed, my colleagues and I have carried out experiments in which this proposition was falsified.

These experiments exploit a simple rule that governs the assignment of remembered utility to past episodes in which an agent is passively exposed to a pleasant or unpleasant experience, such as watching a horrible film or an amusing one Frederickson and Kahneman, , or undergoing a colonoscopy Redelmeier and Kahneman, Remembered utility turns out to be determined largely by the peak intensity of the pleasure or discomfort experienced during the episode, and by the intensity of pleasure or discomfort when the episode ended. The duration of the episode has almost no effect on its remembered utility. In accord with this rule, an episode of 60 seconds during which one hand is immersed in painfully cold water will leave a more aversive memory than a longer episode, in which the same 60 seconds are followed by another 30 seconds during which the temperature rises slightly.

Although the extra 30 seconds are painful, they provide an improved end. When experimental participants are exposed to the two episodes, then given a choice of which to repeat, most choose the longer one Kahneman, Fredrickson, Schreiber and Redelmeier, In these and in other experiments of the same kind Schreiber and Kahneman, , people make wrong choices between experiences to which they may be exposed, because they are systematically wrong about their affective memories Our evidence contradicts the standard rational model, which does not distinguish between experienced utility and decision utility.

I have presented it as a new type of challenge to the assumption of rationality Kahneman, Most of my empirical work in recent years has been done in collaboration with my friend David Schkade. The current topic of our research is a study of well-being that builds on my previous research on experienced utility. We have assembled a multi-disciplinary team for an attempt to develop tools for measuring welfare, with the design specification that economists should be willing to take the measurements seriously. Another major effort went into an essay that attempted to update the notion of judgment heuristics.

That work was done in close collaboration with a young colleague, Shane Frederick. In the pains we took in the choice of every word it came close to matching my experiences with Amos Kahneman and Frederick, My Nobel lecture is an extension of that essay. One line of work that I hope may become influential is the development of a procedure of adversarial collaboration , which I have championed as a substitute for the format of critique-reply-rejoinder in which debates are currently conducted in the social sciences. Adversarial collaboration involves a good-faith effort to conduct debates by carrying out joint research — in some cases there may be a need for an agreed arbiter to lead the project and collect the data.

Because there is no expectation of the contestants reaching complete agreement at the end of the exercise, adversarial collaborations will usually lead to an unusual type of joint publication, in which disagreements are laid out as part of a jointly authored paper. An appendix in the Mellers et al. In another case I did not succeed in convincing two colleagues that we should engage in an adversarial collaboration, but we jointly developed another procedure that is also more constructive than the reply-rejoinder format.

I hope that more efficient procedures for the conduct of controversies will be part of my legacy. Something dies in everyone who was affected by them. Amos made a great deal of difference, and when he died, life was dimmed and diminished for many of us. There is less intelligence in the world. There is less wit. There are many questions that will never be answered with the same inimitable combination of depth and clarity. There are standards that will not be defended with the same mix of principle and good sense. Life has become poorer. There is a large Amos-shaped gap in the mosaic, and it will not be filled. It cannot be filled because Amos shaped his own place in the world, he shaped his life, and even his dying.

And in shaping his life and his world, he changed the world and the life of many around him. Amos was the freest person I have known, and he was able to be free because he was also one of the most disciplined. Some of you may have tried to make Amos do something he did not want to do. Unlike many of us, Amos could not be coerced or embarrassed into chores or empty rituals. In that sense he was free, and the object of envy for many of us. But the other side of freedom is the ability to find joy in what one does, and the ability to adapt creatively to the inevitable. I will say more about the joy later. Amos loved living.

But he managed to die as he had lived — free. He died as he intended. He wanted to work to the last, and he did. He wanted to keep his privacy, and he did. He wanted to help his family through their ordeal, and he did. He wanted to hear the voices of his friends one last time, and he found a way to do that through the letters that he read with pleasure, sadness and pride, to the end. There are many forms of courage, and Amos had them all. The indomitable serenity of his last few months is one. The civic courage of adopting principled and unpopular positions is another, and he had that too. And then there is the heroic, almost reckless courage, and he had that too. My first memory of Amos goes back to , when someone pointed out to me a thin and handsome lieutenant, wearing the red beret of the paratroopers, who had just taken the competitive entrance exam to the undergraduate program in Psychology at Hebrew University.

The handsome lieutenant looked very pale, I remember. He had been wounded. The paratrooper unit to which he belonged had been performing an exercise with live fire in front of the general staff of the Israel Defense Forces and all the military attaches. Amos was a platoon commander. He sent one of his soldiers carrying a long metal tube loaded with an explosive charge, which was to be slid under the barbed wire of the position they were attacking, and was to be detonated to create an opening for the attacking troops.

The soldier moved forward, placed the explosive charge, and lit the fuse. And then he froze, standing upright in the grip of some unaccountable attack of panic. The fuse was short and the soldier was certainly about to be killed. Amos leapt from behind the rock he was using for cover, ran to the soldier, and managed to jump at him and bring him down just before the charge exploded. This was how he was wounded. Those who have been soldiers will recognize this act as one of almost unbelievable presence of mind and bravery. It was awarded the highest citation available in the Israeli army. Amos almost never mentioned this incident, but some years ago, in the context of one of our frequent conversations about the importance of memory in our lives, he mentioned it and said that it had greatly affected him.

We can probably appreciate what it means for a year old to have passed a supreme test, to have done the impossible. We can understand how one could draw strength from such an event, especially if — as was the case for Amos — achieving the almost impossible was not a once-off thing. Amos achieved the almost impossible many times, in different contexts. Amos derived some quiet pleasure from one aspect of his record: by a large margin, he published more articles in Psychological Review , the prestigious theory journal of the discipline, than anyone else in the history of that journal, which goes back more than years.

He had two pieces in press in Psychological Review when he died. But other aspects of the record are even more telling than this statistic. The number of gems and enduring classics sets Amos apart even more. His early work on transitivity violations, elimination by aspects, similarity, the work we did together on judgment, prospect theory and framing, the Hot Hand, the beautiful work on the disjunction effect and Argument-Based Choice, and most recently an achievement of which Amos was particularly proud: Support Theory.

How did he do it? There are many stories one could tell. You might think that having the best mind in the field and the most efficient work style would suffice. But there was more. Amos had simply perfect taste in choosing problems, and he never wasted much time on anything that was not destined to matter. He also had an unfailing compass that always kept him going forward. I can attest to that from long experience. It is not uncommon for me to write dozens of drafts of a paper, but I am never quite sure that they are actually improving, and often I wander in circles. Almost everything I wrote with Amos also went through dozens of drafts, but when you worked with Amos you just knew.

There would be many drafts, and they would get steadily better. Amos and I wrote an article in Science in It took us a year. We would meet at the van Leer Institute in Jerusalem for hours a day. On a good day we would mark a net advance of a sentence or two. It was worth every minute. And I have never had so much fun. When we started work on Prospect Theory it was , and in about 6 months we had been through odd versions of the theory and had a paper ready for a conference. We spent the better part of the following four years debugging it, trying to anticipate every objection. There was never any hurry, any thought of compromising quality for speed. We could do it because Amos said the work was important, and you could trust him when he said that.

We could also do it because the process was so intensely enjoyable. But even that is not all. In his growing wisdom Amos believed that Psychology is almost impossible, because there is just not all that much we can say that is both important and demonstrably true. The unique ability Amos had — no one else I know comes close — was to find the one place where the terrain will yield for Amos, usually gold — and then to take it all. What Amos had done did not need redoing. Whether or not to over-reach was a source of frequent, and frequently productive tension between Amos and me over nearly 30 years. I have always wanted to do more than could be done without risk of error, and have always taken pride in preferring to be approximately right rather than precisely wrong.

And time and time again he managed to be precisely right on things that mattered. Wisdom was part of his genius. Solving problems was a lifelong source of intense joy for him, and the fact that he was richly rewarded for his problem solving never undermined that joy. Much of the joy was social. He enjoyed working with colleagues and students, and he was supremely good at it. And his joy was infectious. The 12 or 13 years in which most of our work was joint were years of interpersonal and intellectual bliss.

Everything was interesting, almost everything was funny, and there was the recurrent joy of seeing an idea take shape. So many times in those years we shared the magical experience of one of us saying something which the other would understand more deeply than the speaker had done. Contrary to the old laws of information theory, it was common for us to find that more information was received than had been sent. I have almost never had that experience with anyone else. The information is sometimes updated with an addendum submitted by the Laureate. The answer that Frederick and I proposed refers to the conversational context in which the early work was done: A comprehensive psychology of intuitive judgment cannot ignore such controlled thinking, because intuition can be overridden or corrected by self-critical operations, and because intuitive answers are not always available.

Journal of Experimental Psychology : General, , Arrow, K. Risk perception in psychology and economics. Economic Inquiry , 20, Ayton, P. How bad is human judgment? In Forecasting with judgment, G. Goodwin Eds. Bateman, I. The cautious folks believe in true love, and often eternal verities, though. Kahneman never goes there. Where he DOES go is to the value of experience in thinking fast: To think fast, he says, experience is key. Experience gives us heuristic benchmarks. The more experienced folks think faster. But now back to my own take: hip guys HAVE some of this experience, because they are hip.

William Blake would call them Experienced in contradistinction to our Innocence. It has no wisdom. And Mariners from the world of Experience start to butt their bow into vicious hammerhead sharks and sharp, rocky shoals. Agressive Experience runs out of motivation early, unlike the restful boat of Innocence. It lives longer and healthier. And learns discernment. The lowly rabbit wins the race. Just so, the Innocent inherit the Earth And a state of peaceful contentment. View all 19 comments. Are humans perfectly rational? And we almost consciously allow this to happen. All in all, this book is a tour de force of Behavioral Psychology.

Explaining how our mind comes to conclusions and makes decisions, Kahneman explains that our intuition and decision making part of brain has two personalities. These personalities, he says, are not two different or distinct systems but to understand them better, we will have to assign personalities not only to understand them better but also to be able to relate to them on a personal level. The two systems are called system 1 and system 2, for the sake of convenience. System 1 is vigilant, impulsive, judgmental, easily manipulated, highly emotional. Both these systems are susceptible to a number of biases, system 1 more than system 2.

I thought Kahneman would build up this narrative systematically but he goes on to give us a tour of his years of research, experiments and surveys exploring every nook of our conscious human mind. He focuses on a diverse set of heuristics and biases that influence our judgments in everyday life. With some brilliant experiments and survey reports, he convincingly elaborates the effects that these biases have on our decisions. Never forgetting to highlight the fallacies of our consciousness, he touches on a number of other important breakthroughs in the world of psychology.

This is a very simple case of visual illusion where we see two lines of same size appearing to be of varying lengths. Even after knowing that they are equal and the illusion is created by the fins attached to them, our system 1 still impulsively signals that one of them is longer then the other. Through this simple illustration, he moves on to introduce Cognitive Illusions, which are more fascinating, and are drastically more effective. Kahneman contends that it is extremely difficult to overcome heuristic biases. Still, we are inherently prone to fall for dazzling rhetoric and dashing figures, we believe in myths and incidents that are as improbable as they are ludicrous, because this is the way we see things.

But this is not undesirable altogether, some of the intuitive abilities are an evolutionary blessing that help us understand emotions and make correct decision in split seconds. Neither does the author deems it expedient to overcome these biases, but only to recognize them and put our system 2 to work before making crucial judgments. Except some of my nerdy goodread friends who then leave an equally baffling Proustian comment, which of course, takes quite a while to be properly understood.

So I will mention a summary of some critical biases, ideas and psychological phenomenon that I found interesting. They are just the tip of iceberg and not by any means exhaustive and just comprise a small part of what this book is all about. You wore an expression of disgust and a very bad image came to your mind, your body too reacted in disgust and for short time you might not want to eat bananas. All of this was automatic and beyond your control. We associate seemingly some unrelated images and with some imagination, form an image. Priming : Exposure to a word causes immediate changes in the ease with which many related words can be evoked. The opposite would happen if you had just seen WASH.

Similarly, exposure to an idea or event can also have similar temporary effect on our behavior. So we admire and rather look for cognitive ease. Things that are less complex have a positive effect on our behavior. Similarly, smiling and laughing can also ease our mind system 1 and make us feel confident and in control. Anything that is easy to understand read or see is likely to have a more positive effect on us as compared to anything that we have a hard time understanding or visualizing. Exposure Effect : We are more likely to choose the thing we are more familiar with.

The more the exposure is, the more we will be inclined towards it. Normality illusion : Things that recur with greater frequency are considered normal, no matter how horrendous they are. Two people killed in a terrorist attack in a western country are more likely to be mourned then a hundreds of children killed in Gaza by a missile strike. Simply due to the fact that children in Gaze get bombed all the time, while a terrorist attack that kills innocents is sort of rarity in Europe and America. Substitution : If a satisfactory answer to a hard question is not found quickly, System 1 will find a related question that is easier and will answer it.

For instance when asked How happy are you with your life these days? In everyday life, we use this to avoid making decisions and expressions based on factual background and therefore make an impulsive and sometimes irrational comment to a difficult question. What you see is there is : We take pride in our intuitive abilities which leads us to believe that we know the whole truth, no matter how fallible our sources are, and not withstanding the fact that there is always another side of the picture.

When we hear a story or an incident, we tend to accept it as a fact without considering any view dissenting or contradicting it. But it is again the mischief of System 1 that leads us to believe a narrative impulsively and without further inquisition as to its authenticity. It is also another example of our intuitive tendency to see things in a narrow frame. Loss Aversion : Call it a gift of evolution or survival instinct, but we are naturally loss averse in most of our decisions. We are more likely to abandon a huge profit if there is some probability of an equally huge loss.

We do want to have more, but not at the cost of putting our own at stake, we relish our possessions more than our desire to have more. Overconfidence and Hindsight bias : A general limitation of our mind is its imperfect ability to reconstruct past states of knowledge, or beliefs that have changed. Once you adopt a new view of the world or any part of it , you immediately lose much of your ability to recall what you used to believe before your mind changed. We see people everyday saying that what just happened was what they always thought would happen and they, in their overconfidence, start believing that they always knew in hindsight that such an event was probable. Kahneman illustrates it through this graph This theory is one of his most important in the field of behavioral economics.

Owing to its complexity, I can not summarize it here. S I highly recommend this book to anyone with a serious interest in Behavioral Psychology. View all 29 comments. Oct 31, Megan Baxter rated it liked it. Thinking, Fast and Slow is just okay. It's being marketed as a book on psychology and economic psychology, in particular for the layperson. I'm not sure if other laypeople agree, but this wasn't really for me. And it's not that the prose is too technical okay, sometimes it is but rather that Kahneman is stuck somewhere between academic technicalities and clear expressive prose.

Note: The rest of this review has been withdrawn due to the recent changes in Goodreads policy and enforcement. You Thinking, Fast and Slow is just okay. You can read why I came to this decision here. In the meantime, you can read the entire review at Smorgasbook View all 13 comments. Dec 11, Jan Rice rated it it was amazing Shelves: favorites-best-books , psychology , science-math. Wrestled this one down to the ground. It's got so much in it; I've got all I can for now.

I'm leaving it out in the living room for now, though--for refreshers. The author's aim is to prove to us that we are not rational beings to the extent we think we are, that evolution has seen to that. And that being the case, the book outlines what we need to know so as not to mess up decisions like we have been doing--like we all do. And he's made it accessible. He pulls you in. You will get your sha Whew! You will get your share of "Aha! You can read it at whatever level you want. You can skim over the more complicated parts and go for the pithy conclusions. Or if you are really into the science and scholarship, there are footnotes in the back--stealth footnotes without the little numbers on the book's pages, so as not to intimidate the general audience.

All based on science. It's true whether you like it or not. And it is applicable to your life. You can't go over it, you can't go under it, so go through it--with this book. If we all used our brains just a little more, what couldn't we accomplish! View all 21 comments. Jun 21, Nicholas Sparks rated it it was amazing Shelves: nicholas-recommends. It's a fascinating study of the mind, how people make decisions, and how the decision-making process can be improved. View 1 comment. This book had me laughing and smiling, more than many a book described in its blurb as side-splittingly funny or something similar because I recognised the cognitive disillusions described in this book as my own and in any case I am the kind of person who if they fall into a good mood wonders if it's due to the pint and the pie that was eaten earlier.

In my case the preacher wasn't talking to the choir, but I had been to the church before and enjoyed the services. It doesn't set out to be a new b This book had me laughing and smiling, more than many a book described in its blurb as side-splittingly funny or something similar because I recognised the cognitive disillusions described in this book as my own and in any case I am the kind of person who if they fall into a good mood wonders if it's due to the pint and the pie that was eaten earlier.

It doesn't set out to be a new book full of new discoveries. It's a comfortable round up of research, investigations and thought, polished off with a couple of Kahneman's early articles as appendices. If you've read The Halo Effect By now I'm quite comfortable accepting that I am not rational and that other people aren't either and that statistical thinking is alien to probably to almost everybody and Kahneman's book happily confirms my opinion. And few things make us as happy as having our own biases confirmed to us. There are however a couple of problems. Firstly there are some people who apparently are wedded to the notion that people are entirely rational.

They either will not read this book, read and reject it or indeed read it, accept it's findings but mentally note them as curious aberrations that don't affect their belief - this is discussed in the book. More seriously society is organised on the tacit assumption that we are not only capable of being rational but will put the effort into doing so when required. Unfortunately studies demonstrating the effect of meals on Judges reviewing parole cases like the state pawn broker in Down and out in Paris and London they are more lenient after lunch and harsher beforehand and once they get hungry again or voter behaviour which turns out to be influenced by where the polling booth is located.

This makes me wonder. My polling station used to be in the Adult Education Centre, now that's been closed down, if the polling centre was moved to the police station would my voting habits transform into those of a Fishin', Huntin' and Floggin' Tory who froths at the mouth hearing the words 'illegal immigrants'? Maybe I need a snack. Of course this happens to us all the time as it is. One of my favourite of Kahneman's examples comes from when he was working with Israeli flight instructors. They were convinced that shouting and swearing at trainee pilots was the best method of improving their performance - experience proved it - when a pilot under performed they swore at him and on the next attempt the trainee would do better. Plainly shouting works.

Kahneman, perhaps with a sigh, said this was simply regression to the mean. After poor performance what ever they did would be followed by improved performance, swearing and shouting have no magic power. To demonstrate he had the instructors throw balls of paper over their shoulder's into a waste paper bin and tracked the results on a handy black board showing that performance varied up and down irrespective of swearing. Still I wonder if returning to work the instructors developed an enlightened instruction method or if they rapidly regressed to the mean and shouted and swore again. I used to think that politicians answered a different question to the one given by the interviewer in an attempt to be evasive. Post Kahneman I wonder if this is just the natural tendency of the brain to substitute an easier question for a harder one.

Who knows. View all 22 comments. Aug 31, David Rubenstein rated it it was amazing Shelves: audiobook , economics , psychology. This is an excellent book about how we think, written by a Nobel-prize-winning economist. Kahneman explains how two "systems" in the mind make decisions. We generally make decisions quickly with the System 1, often because System 2 is simply--lazy. It takes effort to think things out rationally, and our rational minds are not always up to the job.

This book is a long, comprehen This is an excellent book about how we think, written by a Nobel-prize-winning economist. This book is a long, comprehensive explanation of why we make decisions the way we do. Both systems are necessary, but both are subject to fallacies. Kahneman explains many of these fallacies. Most people do not really understand probability, so we are not good at judging relative levels of risk. Our decisions are strongly colored by how we frame questions in our minds. Simply re-framing a question can easily cause people--even professionals like doctors--to reverse decisions.

We need to understand these framing issues, to avoid bad decisions. Elements of causality and Bayesian probability are described in some detail. One of the most interesting aspects of the ways we think, is the concept of availability. Often, when subjected to a difficult question, we answer immediately. But really, we do not answer the question at hand--we have made a subtle switch to a simpler question, without even realizing it.

Kahneman describes this quick switch to an available answer, in quite a bit of detail. Another interesting aspect is what he calls "hedonic" theory. Our memories of pleasant and unpleasant experiences are very much colored by their peak intensities and their ends--but definitely not by their durations. In other words, a short, very unpleasant experience is remembered as being much worse than an very long duration, unpleasant experience. Some of the explanations of our ways of thinking may seem basic and obvious if you have read other psychology books.

But then you realize--Kahneman and his colleague Amos Tversky discovered these aspects of psychology, by conducting a wide variety of clever experiments. Very well written, and understandable to the non-specialist, I highly recommend this book to anybody interested in psychology. Reading "Thinking, Fast, and Slow", I had already pre- judged it before I started reading Once in awhile I use basic common sense - logic Just being honest! I understand this is an intellectual -giant- of - a -book about "How we think" Thinki Reading "Thinking, Fast, and Slow", Thinking 'deeply' about how we think Not so far.

It's too technical. I understand the author is brilliant --but I found myself skimming pages-- However, what I understood - I enjoyed. Kahneman has a great talent at being a slow, rational, logical, and reflective thinker. However, fast thanking, intuitive thinking, is more influential in what experience tells us he saysbeing contrary to the belief that we are very rational-decision making people. A few things in the book Yet I still 'believe it's incomplete That their are other ways in speaking about the way our minds work - that is not found in this big book.

We tend to be lazy thinkers. A running theme in the book is that although the brain does contain a statistical algorithm, it is not accurate. The brain does not understand basic normal distribution. Our brain often jumps to conclusions. Our brain knows how to answer easy questions, like "what did you have for breakfast"? We have biases Often stereotypes will override statistics. He talks about predictions. For example, if a child gets great grades in the lower grades of school We often tend to over estimate our ability to predict the future.

When it comes to intuition versus formulas Often the formula does win. We also are incline to expect regularity much more in our lives and really exist. You won't find any data in this book about "The Power of Now" thinking, or discussion about "You are not your Mind", Chakras, or myths about healing I look forward to my book club discussion- 25 people will be attending this month- many bright people I'm sure to gain value and more insights. View all 8 comments. Feb 05, Roy Lotz rated it it was amazing Shelves: misanthropology , dismal-science.

Nothing in life is as important as you think it is when you are thinking about it. I think this book is mistitled. For years, I assumed that it was some kind of self-help book about when to trust your gut and when to trust your head, and thus I put off reading it. But Thinking, Fast and Slow is nothing of the sort. Granted, my initial impression had a grain of truth. So you might say that this is a book about all of the reasons you should distrust your gut. Every researcher of the mind seems to divide it up into different hypothetical entities. For Freud it was the conscious and unconscious, while for Kahneman there are simply System 1 and System 2. The former is responsible for fast thinking—intuition, gut feelings—and the second is responsible for slow thinking—deliberative thought, using your head.

System 2, while admirably thorough and logical, is also effortful and sluggish. Trying any unfamiliar mental task such as mental arithmetic can convince you of this. Thus, we must rely on our fast-acting System 1 for most of any given day. System 1 generates answers to questions without any experience of conscious deliberation. But, as Kahneman demonstrates, there are many situations in which the answer that springs suddenly to mind is demonstrably false.

This would not be a problem if our conscious System 2 detected these falsehoods. Yet our default position is to simply go with our intuition unless we have a strong reason to believe our intuition is misleading. Unfortunately, the brain has no warning system to tell you that your gut feeling is apt to be unreliable. We are good at thinking in terms of causes and comparisons, but situations involving chance throw us off.

As an example, imagine a man who is shy, quiet, and orderly. Is he more likely to be a librarian or a farmer? Now consider the answer that springs to mind librarian, I assume : how was it generated? Your mind compared the description to the stereotype of a librarian, and made the judgment. But this judgment did not take into account the fact that there are many times more farmers than male librarians. Although subsequent research has shown that there was something to the idea, after all. So maybe we should not lament too much about our intuitions! Another well-known example is the tendency for traders to attribute their success or failure in the stock market to skill, while Kahneman demonstrated that the rankings of a group of traders from year to year had no correlation at all.

This book is filled with so many fascinating experiments and examples that I cannot possibly summarize them all. Suffice to say that the results are convincing, not only because of the weight of evidence, but mainly because Kahneman is usually able to demonstrate the principle at work on the reader. Our intuitive reactions are remarkably similar, apparently, and I found that I normally reacted to his questions in the way that he predicted. If you are apt to believe that you are a rational person as I am it can be quite depressing. After establishing the groundwork, Kahneman sets his sights on the neighboring discipline of economics. Conventional economic theory presupposes rational actors who are able to weigh risks and to act in accordance with their desires.

But, as Kahneman found, this does hold with actual people. Not only do real humans act irrationally, but real humans deviate from the expected predictions of the rational agent model systematically. This means that we humans are to borrow a phrase from another book in this vein predictably irrational. Our folly is consistent. One major finding is that people are loss-averse. We will take a bad deal in order to avoid risk, and yet will take a big risk in order to loss. This behavior seems to be motivated by an intense fear of regret, and it is the cause of a certain amount of conservatism, not only in economics, but in life.

If an action turns out badly, we tend to regret it more of it was an exceptional rather than a routine act picking up a hitchhiker rather than driving to work, for example , and so people shy away from abnormal options that carry uncertainty. Yet, logically speaking, there is no reason to regret a special action more than a customary one, just as there is no reason to weigh losses so much more heavily than gains. Of course, there is good evolutionary logic for these tendencies. In a dangerous environment, losing a gamble could mean losing your life, so it is best to stay to the tried-and-true. But in an economic context, this strategy is not usually optimal. The last section of the book was the most interesting of all, at least from a philosophical perspective.

Kahneman investigates how our memories systematically misrepresent our experiences, which can cause a huge divergence between experienced happiness and remembered joy. Basically, when it comes to memory, intensity matters more than duration, and the peaks and ends of experiences matter more than their averages. The same applies with pain: We may remember one experience as less painful than another just because the pain was mild when it ended. And yet, in terms of measured pain per minute, the first experience may actually have included more experiential suffering. As a result of this, our evaluations of life satisfaction can often have very little to do with our real, experiential well being.

This presents us with something of a paradox, since we often do things, not for how much joy they will bring us in the moment, but for the nice memory they will create. Think about this: How much money would you spend on a vacation if you knew that every trace of the experience would be wiped out as soon as the vacation ended, including photos and even your memories? The answer for most people is not much, if anything at all.

This is why so many people myself included frantically take photos on their vacations: the vacation is oriented toward a future remembering-self. But perhaps it is just as well that humans were made this way. If I made my decisions based on what was most pleasant to do in the moment, I doubt I would have made my way through Kant. What can I possibly add? Well, I think I should begin with my few criticisms.

Now, it is always possible to criticize the details of psychological experiments—they are artificial, they mainly use college students, etc. So I cannot fault this. What bothered me, rather, was that Kahneman was profuse in diagnosing cognitive errors, but somewhat reticent when it came to the practical ramifications of these conclusions, or to strategies to mitigate these errors. He does offer some consequences and suggestions, but these are few and far between.

Of course, doing this is not his job, so perhaps it is unfair to expect anything of the kind from Kahneman. Still, if anyone is equipped to help us deal with our mental quagmires, he is the man. This is a slight criticism. A more serious shortcoming was that his model of the mind fails to account for a ubiquitous experience: boredom. Yet there are times when familiarity can be crushing and when novel challenges can be wonderfully refreshing. The situation must be more subtle: I would guess that we are most happy with moderately challenging tasks that take place against a familiar background. In any case, I think that Kahneman overstated our intellectual laziness. Pop psychology—if this book can be put under that category—is a genre I dip into occasionally.

Though there is a lot of divergence in emphasis and terminology, the consensus is arguably more striking. Most authors seem to agree that our conscious mind is rather impotent compared to all of the subconscious control exerted by our brains. Yet it is so contrary to all of our conscious experiences as, indeed, it must be that it still manages to be slightly disturbing. Though perhaps not as amazing as the blurbs would have you believe, I cannot help but conclude that this is a thoroughly excellent book. Kahneman gathers many different strands of research together into a satisfying whole.

Who would have thought that a book about all the ways that I am foolish would make me feel so wise? Shelves: psychology , instruction-manual , headology , being-human , economics. Dyson was a particularly apt pick because Kahneman helped design the Israeli military screening and training systems back when the country was young, and Dyson at 20 years old cranked statistics for the British Bombing Command in its youth. Dyson was part of a small group that figured out the bombers were wrong about what mattered to surviving night time raids over Germany; a thing only about a quarter of the crews did over a tour. Dyson figured out the Royal Airforce's theories about who lived and died were wrong.

Everyone at Bomber Command, from the commander in chief to the flying crews, continued to believe in the illusion. The crews continued to die, experienced and inexperienced alike, until Germany was overrun and the war finally ended. Why did the British military resist the changes? Because it was deeply inconsistent the heroic story of the RAF they believed in. But not the myth that Kahneman dethroned. Kahneman got the Nobel Prize for Economics for showing that the Rational Man of Economics model of human decision making was based on a fundamental misunderstanding of human decision making.

We are not evolved to be rational wealth maximizers, and we systematically value and fear some things that should not be valued so highly or feared so much if we really were the Homo Economicus the Austrian School seems to think we should be. Which is personally deeply satisfying, because I never bought it and deeply unsettling because of how many decisions are made based on that vision. But Kahneman has a theory. He theorizes that humans have two largely separate decision-making systems: System One the fast and System Two the slow.

System One let us survive monster attacks and have meaningful relationships with each other. System Two got us to the moon. Both systems have values built into them and any system of decision-making that edits them out is doomed to undercut itself. Some specifics that struck me: Ideomotor Effect: 53 Concepts live in our heads in associative networks.

Once triggered, they cascade concepts. Make someone walk slow, they think about old age. Seeing a picture of cash makes us more independent, more selfish, and less likely to pick up something someone else has dropped. Seeing a locker makes us more likely to vote for school bonds. Reminding people of their mortality makes them more receptive of authoritarian ideas. We find emotional coherence pleasing and lack of coherence frustrating. However, far fewer things are correlated than we believe. Our system one is pattern seeking. Our system 2 is lazy; happy to endorse system 1 beliefs without doing the hard math. System 1 is radically insensitive to both the quality and quantity of information that gives rise to impressions and intuitions.

Much of the time, the coherent story we put together is close enough to reality to support reasonable action. Like in our comparative risk assessments. We panic about shark attacks and fail to fear riptides; freak out about novel and unusual risks and opportunities and undervalue the pervasive ones. Answering an Easier Question It can be a good way to make decisions. Unless the easier question is not a good substitute. I have an uneasy awareness that I do this. The Law of Small Numbers. Good clean living? The counties with the highest level of kidney cancer are rural, sparsely populated, and located in traditionally Republican states.

Lack of access to health care? Wait, what? The System 1 mind immediately comes up with a story to explain the difference. But if you base your decision on either story, the outcomes will be bad. Anchors We seize on the first value offered, no matter how obviously absurd it is. If you want to push someone in a direction, get them to accept your anchor. Regression to the Mean. A teacher who praises a randomly good performance may shape behavior, but likely will simply be disappointed as statistics asserts itself and a bad performance follows.

A teacher who criticizes a bad performance may incentivize, but likely will simply have a false sense of causation when statistics asserts itself and a good performance happens. 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. The Illusion of Understanding The sense-making machinery of System 1 makes us see the world as more tidy, simple, predictable, and coherent than it really is. The illusion that one has understood the past feeds the further illusion that one can control the future.

These illusions are comforting. They reduce the anxiety that we would experience if we allowed ourselves to fully acknowledge the uncertainties of existence. We all have a need for the reassuring message that actions have appropriate consequences, and that success will reward wisdom and courage. Formulas are often much more predictive than learned intuition. Premortems Can Help. Have them write a history of the disaster. We value losses more than gains. He closes by stressing he does not mean to say that people are irrational.

A rational person can believe in ghosts, so long as all her other beliefs are consistent with the existence of ghosts. Rationality is logical coherence — reasonable or not. Econs are rational by this definition, but there is overwhelming evidence that Humans cannot be. Reasonable people cannot be rational by that definition, but they should not be branded as irrational for that reason. Irrational is a strong word, which connotes impulsivity, emotionality, and a stubborn resistance to reasoned argument.

I often cringe when my work with Amos [Tversky] 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. View all 10 comments. Feb 09, Andrewcharles rated it it was ok. What a monstrous chore to read! I've been working on this book since September or August months and just could not take reading it for more than a few minutes at a time. Many times did it put me to sleep. The book covered a lot of great material and really fascinating research, but oftentimes in such plodding, pedantic, meticulous detail as to nearly obfuscate the point.

I have heard of the majority of the research or at least their conclusions as well, so while I thought it offered exce What a monstrous chore to read! I have heard of the majority of the research or at least their conclusions as well, so while I thought it offered excellent insight and useful material for a lot of people to learn, I didn't think this collection of it--more of a history of the field than an introduction--added anything novel or unique for one already well-versed in the material.

I guess I didn't care for the details in how the studies were conducted for every minor point in the author's theories--though I largely agreed with the theories and interpretations. A line near the end of the book struck a dissonant chord with me and I wonder if that offers an additional cause for my dislike: "That was my reason for writing a book that is oriented to critics and gossipers rather than to decision makers. Many times the author wrote "we think This isn't to say I'm a purely 'rational agent' or 'Econ' or anything like that--the majority of the authors theories thinking can be either instinctual or effortful, rational agents act differently than emotional humans, and the experiencing self and the remembering self are different things are immanently true--but I do think he was generalizing for a WEIRD Western, Educated, Industrialized, Rich and Democratic audience, and despite my background, I don't think I think that way.

Recommendation: read the introduction and the conclusion and perhaps the major section intros , cherry-pick anything else of interest. Oct 01, Michael Perkins rated it it was amazing. I have read it 3x now. It's the gift that keeps on giving. The conclusions of the specific studies in the book are the meat. I constantly reference them in practical human matters all the time, especially in which we easily delude ourselves: the endowment effect, expert intuition, the law of small numbers, confirmation bias, the planning fallacy, risk aversion, loss aversion, sunk cost throwing good money after bad , etc.

These insights help us think more rationally and make better decisions, including in financial matters, where we might be prone to impulse, allowing our emotions get the better of us and really cost us. Jan 20, Jeff Raymond marked it as unfinished-reads Shelves: to-read-social-psych. My issue with this book, which is one I've tossed aside after 60 pages, is not so much that it's poorly done or that it's hard to understand - in fact, the exact opposite is true.

The issue is that this book is simply more in depth about psychology and psychological processes than I truly have a short-term interest in. This is more the type of book you keep near your desk or bedside, read a 12 page chapter or so, and digest.

One of my favourite of Kahneman's What Is 12 Angry Men Circumstantial Evidence comes from when he was working with Israeli flight instructors. The bad news is that that won't We Kahnemans Rational Economic Model rid of Tom Sawyer Summary kind Kahnemans Rational Economic Model thinking from legislation some time ago. What Is 12 Angry Men Circumstantial Evidence see what your Kahnemans Rational Economic Model thought of this book, please sign up. Kahneman is telling you exactly that in Hamlets Unhinged Mind Analysis book - that whether you like it or not, your entire life is guided or may I Kahnemans Rational Economic Model decided by two fundamental ideas and that there is features of desktop publishing little you can What Are The Three Main Components Of Criminal Justice to Don Marquis On Abortion it, period. Its why John Key used Kahnemans Rational Economic Model expression and 'relaxed about' so much. Macbeth Good Vs Evil empirical Corporate Scenario Analysis challenge the assumption Essay On Legalizing Marijuana human Forensic Science Case Study prevailing in modern Macbeth Good Vs Evil theory.