Prof. Bongo in one of our Data Analytics lessons asked if we had read this book by Kahneman.
Well, here is a summary:
Thinking Fast and Slow is a book on behavioral psychology and decision-making and shows you how two systems in our brain are constantly fighting over control of our behavior and actions and teaches the many ways in which this leads to errors in memory, judgment and decisions, and what you can do about it.
“Nothing in life is as important as you think it is, while you are thinking about it”. Daniel Kahneman
Things that are happening in our lives may feel like a big deal. We believe them to be incredibly significant, but why? We can claim that it’s because “they are important” or that it’s a “huge deal,” but most of the time it’s just the fact that we give them thought that makes them significant.
“The Focusing Illusion” refers to the fundamental notion that elevating something’s importance requires only that we focus on it. One of the most intriguing and potent cognitive biases is this one. According to Daniel Kahneman, one of the most significant scientific ideas ever is the focusing illusion.
WYSIATI: What you see is all there is.
Kahneman described the phenomenon of how people jump to conclusions based on limited information
Behavior is determined by 2 systems in your mind-one conscious, aware and considerate and the other automatic and impulsive– System 1 is fast, automatic, and impulsive. It is a remnant from our past. -System 2 is slow, more logical, very conscious and considerate. Helps us exert self-control and deliberately focus our attention.
These 2 systems hardly work together. And always fight for who is in charge and it is very important to analyze both systems typically before making decisions (Anchoring)
The brain is lazy and thus keeps you from using the full power of your intelligence: The brain helps us make intellectual errors. E.g. the bat and bull problem (e.g. a bat and bull cost $1.10 ; a bat costs 1 dollar more than a bull, how much does the bull cost?
Solution: Bull=$0.50+bat $1.05= $1.10.
It is easy to arrive at $1 as opposed to $1.05.
- When system 1 faces a tough problem, it can’t solve, it forces system 2 to resolve it.
- It leaves you without an option to use of your IQ and as such the brain limits intellect by being lazy
- System 1 (Thinking Fast) frequently causes people to form hasty judgments, leap to conclusions, and make poor choices based on prejudices.
- System 1 operates continuously and renders snap judgements, intuitions, and rapid impressions. For analysis, problem-solving, and more thorough evaluations, System 2 is employed.
- Due to System 1’s advice being easier on the mind, we frequently follow them. When we notice something unexpected or deliberately take our time to think critically, System 2 may occasionally be activated.
- System 1 aims to create a coherent and credible tale based on the information at hand. This frequently causes us to focus on few data that is provided while dismissing crucial information that is missing.
#MEMBA11 # DataAnalytics #ThinkingFast&Slow