Thinking, Fast and Slow
“System 1”, the unconscious modes/modules of our brains thinking, processes much of what we think and do. Humans are instinctively lazy when it comes to relying on our instincts, and will avoid engaging “System 2”, our more detailed and “rational” way of thinking about things, if we can. Humans are also very bad at thinking in terms of statistics and probable outcomes, instead relying on “System 1” and the seat of our pants thinking. Humans are prone to generalizations and, in general, not thinking critically. “When people believe a conclusion is true, they are also very likely to believe arguments that appear to support it, even when these arguments are unsound”. High intelligence does not make people immune to these biases; confirmation bias persists. So called “priming” is a basis of behavioral economics, saying that there are external factors that exist which can impact the decisions we make (I.e. thinking about something, nodding a certain way, etc). Furthermore, framing very much impacts the decisions we make — thus, it is good to be critical in framing questions in both ways. If we think we are “being watched”, or are reminded of such an idea with images of eyes, we are likely to behave in a certain way. Reference points tether us to an initial number, I.e. how much a product costs now, and all subsequent debate is in reference to that original number. Our mind is eager to assign agents personality traits and intentions, even if there are none; people are prone to apply causal thinking. “Jumping to conclusions is efficient if the conclusions are likely to be correct and the costs of an occasional mistake acceptable.” “Open discussion” gives a lot of weight to whoever speaks early and assertively, as others bring their behavior in line behind them. Intuitive thinking relies on “what you see is all there is.” We search for information and arguments that are consistent with existing beliefs, not with an intention to examine our existing beliefs. RE: small sample sizes, statistics, correlation and causation; correlation does not necessarily equal causation. Many facts of the world are chance, sampling errors, etc. Availability bias reflects the things we have in our memory to pull up; those things easily available. These can tend to be images of doom and gloom (from mass media etc.), the most unlikely things. “The emotional tail wags the rational dog” (Haidt) — we like what we like, and dislike what we dislike, and the brain falls in line behind that. Says resistance to stereotyping does not come without an actual cost; some stereotypes may have actual basis. “Regression to the mean” — Steve has a lucky bowling game, his next game is likely to “regress to the mean” that he is not actually all that good of a bowler. To properly test hypotheses, control groups are necessary — to see whoever or whatever gets whatever it is, just because. “We are not all rational, and some of us may need the security of distorted estimates to avoid paralysis. If you choose to delude yourself by accepting extreme predictions, however, you will do well to remain aware of your self-indulgence”. We have an “outcome bias” that someone who did well at something was skillful, but a lot of that outcome is likely the product of luck, and they just happened to be the lucky winner. Thus, “hedgehogs” know a lot about something, have a theory, and are very confident (over-confident) in what they think, reluctant to admit error and upset with those who disagree. “I AM INFALLIBLE.” True expertise can be applied in an environment that is sufficiently regular to be predictable, and someone has had a lot of experience with this (I.e. fixing cars, and not picking stocks or the outcomes of political decisions). The “planning fallacy” describes plans which are unrealistically close to best-case, and would be better suited to looking at statistics from analogous scenarios. We focus on what we know and neglect what we do not know, making us overconfident. We also demand that “experts” have a crystal ball, leading to their having too many predictions when they are not qualified to give them. Optimism can lead to many subpar outcomes for companies and policy, but that for individuals, there are psychological benefits of the disposition. Cites studies of what people think is “fair” or “unfair” in market situations, such as reducing wages when market wages go down (unfair), or raising prices in response to demand going up (also unfair). “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.” — moral shaming of others provides a great psychological/societal benefit. “Golfers putt more successfully when working to avoid a bogey and to achieve a birdie.”
· The mental work that produces impressions, intuitions, and many decisions goes on in silence in our mind.
o most of the work of associative thinking is silent, hidden from our conscious selves. The notion that we have limited access to the workings of our minds is difficult to accept because, naturally, it is alien to our experience, but it is true: you know far less about yourself than you feel you do.
· System 2 is activated when an event is detected that violates the model of the world that System 1 maintains.
· People who are cognitively busy are also more likely to make selfish choices, use sexist language, and make superficial judgments
· …search for information and arguments is mostly constrained to information that is consistent with existing beliefs, not with an intention to examine them
· …people form opinions and make choices that directly express their feelings and their basic tendency to approach or avoid
o “The emotional tail wags the rational dog.”
· Resistance to stereotyping is a laudable moral position, but the simplistic idea that the resistance is costless is wrong.
· … compelling causal statistics will not change long-held beliefs or beliefs rooted in personal experience.
· …the person who acquires more knowledge develops an enhanced illusion of her skill and becomes unrealistically overconfident… They are dazzled by their own brilliance and hate to be wrong.
· …optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers