‘Thinking, Fast and Slow’ for those who haven’t read it

The behavioural psychology classic explained in 10 minutes

Daniel Kahneman’s Thinking, Fast and Slow is a classic, but like most classics gathering dust on our bookshelves, it is not exactly a breezy read. I first flirted with it a few years ago but couldn’t make it past the first few chapters.

Now, decades of reading has made me a fairly quick reader, but I just couldn’t crack this one. I even bought a hardcover version, applying the same logic as the people who buy annual gym memberships in January. Fortunately, in my case the outcome was a happy one.

It took a few more attempts over the next couple of years for me to finally finish the book. I can now confidently report that the effort was well worth it. Kahneman is the Godfather of his field, because he and his now-deceased former colleague, Amos Tversky, literally invented the field of behavioural psychology.

I believe everyone should benefit from this monumental work, which is why I’ve compiled the best ideas from the book and tried to explain them in simple aphorisms. I hope you find them useful.

Part 1: The Two Systems

Or the Maverick and the Bureaucrat

1. The story begins with the two modes of thinking and action that are present in all of us.

Consider these two as software programs that have a love-hate relationship.

Kahneman called them Systems 1 and 2 but I have more interesting names for them: The Maverick and the Bureaucrat.

2. The Maverick can’t help but take in everything — sights, sounds, sensations — and acts quickly and effortlessly.

The Bureaucrat’s is the one who says ‘hold on now!’

But it’s often lazy and lets the Maverick run circles around it.

3. The Maverick is fond of jumping to conclusions.

It does this by recalling what it has seen earlier and connecting it to the present — it’s a pattern matcher par excellence.

This is why both intuition and quick judgments are the Maverick’s thing.

4. The Bureaucrat has the ability to take a pause and curb the Maverick’s enthusiasm.

It likes to check the paperwork before passing any judgments.

However, it’s often found napping and needs to be nudged awake.

5. Despite his professed thoroughness, the Bureaucrat doesn’t like to go out and collect evidence by itself.

The Maverick is his only connection to the world.

And the Maverick often slips in things that the Bureaucrat fails to notice: biases, judgments, & preconceived notions.

6. When faced with something new, the Maverick sends out an SOS to the Bureaucrat.

It is here that the Bureaucrat summons its powers of attention and logic to make sense of the novelty.

Once sufficiently analysed, the novelty becomes part of the Maverick’s database.

7. The Maverick doesn’t respect the rules, can’t sit still and blurts out what it truly thinks.

Self-control is possible only because of the Bureaucrat.

It is what makes us ‘civilised’.

8. But the Maverick has one great advantage over the Bureaucrat: it never tires.

The latter has limited reserves of energy and is easily exhausted after a bout of focused attention.

While the Bureaucrat reenergises, the Maverick becomes the driver of behaviour.

9. Intelligence, as it’s commonly understood, is closely linked with self-control and attention.

Which means that ‘non-intelligent’ thinking is often nothing more than trusting the lazy intuitions of the Maverick.

10. The Maverick does its business silently at an unconscious level.

We can only guess at its working through the Bureaucrat.

Whenever we think about our experience, it is the Bureaucrat that is doing the narration in our head.

11. The Maverick loves to make connections.

Like in a chain reaction, ideas, emotions and actions can link in a growing cascade before we even realise what’s happening.

This is how we get primed by ideas we have no awareness of.

12. Mere Exposure Effect:

when we’re exposed to something — an idea, object, or a piece of art — repeatedly we develop a subconscious liking for it.

This is why advertising works even when we don’t seem to notice it.

13. An idea we’ve been exposed to feels familiar to the Maverick.

What is familiar is often mistaken for what is true.

Priming, therefore, can set us up to believe claims that we would otherwise doubt.

14. Trust is the default state of the Maverick.

It’s what makes it credulous and gullible.

But it’s also the originator of creativity as it’s more willing to make outlandish connections.

15. Vigilance is the default state for the Bureaucrat.

It is called in whenever we need to process something unfamiliar.

It prevents us from being fooled, but makes us less creative and slower in our response.

16. When we are able to process the world effortlessly, we feel good about ourselves and are more open to experiences.

So if you want to be seen as trustworthy by others, avoid activating the Bureaucrat in them.

Keep your communication simple.

17. The Maverick maintains a model of our personal world and is quick to detect deviations from it.

But it also gets used to new experiences quite fast:

If you spot a unicorn on the road two days in a row, it won’t be as surprising the second time.

18. The Maverick can jump to conclusions without breaking a sweat.

It overweighs recent and vivid experiences, and rarely experiences doubt.

Whenever a conclusion doesn’t seem like the result of a choice, the Maverick is at work.

19. The 17th century Dutch philosopher Spinoza said that we believe first and doubt later.

The Maverick is the gatekeeper and lets everything in.

It is only the Bureaucrat which has the ability to evaluate and eject the non-truths, but it’s often too lazy or tired to do so.

20. The Maverick hardly ever gets stumped.

When faced with a difficult question, it just answers another, easier question instead.

Example: When asked about how our life is going, we simply replace the question with how we are feeling right now.

21. The Bureaucrat can correct the Maverick’s course if motivated enough to do so.

Usually, however, it just acts as an apologist for the latter.

The default for the Bureaucrat is to look for evidence that confirms the Maverick’s impressions.

Part Two — Heuristics and Biases

22.Heard that one about never letting facts get in the way of a good story?

That’s the Maverick for you.

It likes to build narratives that flow effortlessly, rather than worry about the reliability of the information it receives.

One of the things it fails to get is statistics.

23.We are largely inept at statistical intuition and look for causality even in cases which are purely based on chance.

Consider the hot-hand fallacy:

Mistaking a random spike in a player’s performance as an actual increase in ability.

24.Even a random process sometimes produces instances that look like they’ve been caused by something or someone.

Seeing causality in randomness has caused untold misery in the stock market and on the gambling table.

25.The anchoring effect is so powerful because it exploits the Maverick’s most serious weakness:

the tendency to always look for confirming evidence.

That’s why no matter how random an anchor, it will sink its claws deep inside us.

26.Even the Bureaucrat finds it difficult to break free of anchoring because it relies on the Maverick’s inputs.

And because the Bureaucrat is often too lazy and tired to bother.

27.The only way to beat the effect of an anchor is to deliberately reject it, especially in negotiations.

Always assume that the number in front of you has biased you.

Only a clean slate can help you beat the invisible force of the anchor.

28.Why does every winter feel the coldest ever?

Because how cold you feel in the moment comes most easily to mind than maybe even colder weather in the past.

This is the availability bias.

29.The availability bias is when we replace a difficult question with an easier one:

‘What can I most easily remember about this?’

And what we can recall most easily are recent or vivid events (how teeth-chatteringly cold you feel right now)

30.Affect Heuristic

When we subconsciously replace the question ‘What do I think about it?’ with ‘What do I feel about it?’

This is why we vote for politicians not on their policies, but how voting for them makes us feel.

31.Very few choices are completely good or bad.

Understanding the risk in a choice is about knowing the tradeoff involved.

The affect heuristic causes us to ignore this and take extreme positions.

In Jon Haidt’s words: the emotional tail wags the rational dog.

32.Representativeness:

When we judge the probability of something based on how similar it is to the stereotype we have in our heads.

Is a shy person more likely to be a musician or a scientist?

Most people choose ‘scientist’ because a shy musician seems like an anomaly.

33.Base Rate Neglect:

Our tendency to weigh plausibility over probability.

Startup success rate is pretty low, but new founders believe these odds don’t apply to them because the path to success feels quite straightforward to them.

34.Conjunction Fallacy:

judging the combination of two events as more probable than one event alone.

Specifying something in more detail makes it easier to imagine, but reduces its probability.

35.Stories > Statistics

If you want to change someone’s mind, don’t show them statistics.

Instead, give them a concrete example that supports the statistics & contradicts their existing beliefs .

36.Regression to the Mean:

Extreme outcomes rarely continue and mostly always come back to a base level.

Whether on the sports field or the stock market, extraordinary performances are usually just random fluctuations.

Part 3 — Overconfidence

37.Narrative Fallacy:

Our tendency to form coherent stories explaining events after they have happened.

But the value of an explanation lies not in how plausible or coherent it sounds, but whether it can predict future events.

38.Hindsight is 20/20 because it is extremely difficult to remember our past beliefs.

Once an event changes our beliefs, we forget how much it surprised us at the time.

39.Outcome Bias:

evaluating the quality of a decision on the basis of its outcome.

Bad decisions often lead to good results and vice-versa.

However, in the long run, it is the quality of our decision-making process that determines whether we come out ahead.

40.Halo Effect:

our tendency to judge everything about a person based on whether we like or dislike one thing about a person, including the things you haven’t noticed.

This satisfies our need for clear narratives and causality:

like how the success of companies is attributed more to CEO’s than to luck.

41.Confidence is a feeling, not a conclusion arrived at logically.

We feel more confident in our judgments when we are able to reach them with ease.

This is why the lesser the evidence, the easier we are able to create explanations, and more confident we feel.

42.Illusion of Skill:

Arriving at a decision by exercising your hard-earned skills can give you the feeling that you’re right.

However, the only proof of skill is whether you persistently outperform others.

43.Expert Judgments

The predictions of experts have been shown to be no better than chance.

In fact, more knowledgeable an expert, the worse their predictions.

Why?

44.Reality is complex and unpredictable, and luck plays a huge role in determining outcomes.

In such a world, confidence cannot be a measure for accuracy.

Experts come up short precisely because of lack of self-doubt and insistence on certainty.

45.Expert intuition is more trustworthy when the environment is predictable and there are ample chances to learn from quick feedback.

Medicine and chess are two such environments.

Stock trading and politics aren’t.

46.Optimism Bias is when we consider:

• our own traits as favourable
• the world as benign
• probability of our success higher than is warranted
• the competition as non-existent

47.Planning Fallacy:

We tend to underestimate the time it will take to complete a project and overestimate the probability of things going right.

A project has multiple steps, which means there are multiple ways in which things can go wrong.

48.Sunk Cost Bias:

When we base decisions on where we’ve been rather than where we want to be.

Ask yourself: would you choose the same course of action if you weren’t invested in it because of sunk costs?

49.Overconfidence is usually a result of ignorance of risks, not of some inherent trait.

Part 4 — How We Make Choices

50.Prospect Theory

It is not the just amount of wealth we have that determines how happy we are, but also how we got there.

Going from $100 to $50 is not the same as going from $10 to $50.

Directionality matters.

51.We pay more attention the negative than to the positive:

• Losses hurt more than gains give pleasure
• concessions given to others seem larger than concessions received
• bad behaviour is punished more severely than good behaviour is rewarded

52.Loss Aversion

Losses loom larger than gains.

Experiments have shown that we are willing to take a risky decision only when the possible upside is twice that of the potential downside.

53.When things are going well for us, our default mode is to be risk averse.

This is because our overriding emotion in this case is protection against disappointment.

This is the domain of insurance.

54.When all our options are bad, we become risk-seeking.

This is because in a hopeless situation, even the slightest amount hope is more powerful than possibility of further loss.

55.Setting goals can sometimes hurt us.

Goals become reference points and exceeding them can become less important than preventing failure.

Which is why we often reduce our efforts as we near our goals so as to just achieve, but not exceed, them.

56.Status Quo Bias:

The disadvantages of a change seem much bigger than its advantages.

57.Endowment Effect:

Unwillingness to give up something we own, even when it’s irrational to do so.

Traders have been shown not to suffer from this because they can see goods simply as carriers of value for future exchanges.

58.Good poker players don’t try to win every game, rather they take decisions that get them ahead over the long term.

Similarly, by broadening our frame and seeing individual decisions as part of a larger group of decisions, we can avoid the paralysing effects of loss aversion.

59.Reducing regret is often a bigger motivator than achieving the best possible outcome.

60.Framing:

How choices are framed determines our actions in the real world.

Options framed as losses are seen to be worse than the same options framed as gains.

Even moral feelings depend not on reality but how they’re framed.

Part 5 — The Two Selves

61.We have two selves:

One that actually experiences life in the moment, but has no voice.

Another, that remembers those experiences and makes choices based on memories.

62.Confusing the two selves is an inherent feature of humans.

Which is why maximise future memories, not actual experience.

Cellphones in concerts.

63.Since memories are used to choose whether we will repeat an experience, we often make decisions that we later regret.

The simple solution is to simply record how you are feeling in the moment, rather than rely on your unreliable later.

64.We rate experiences by remembering stand out moments — especially peaks and endings — not through overall assessments.

A mostly average vacation, with a few highly enjoyable moments is remembered more fondly than is merited.

65.Similarly, the duration of an experience matters little to us compared to peak moments.

It’s like choosing to have a bandaid stripped off slowly rather than in one split second peak of pain.

66.The remembering self thinks in terms of averages, not sums.

This is why we judge the quality of our lives based on significant events and memorable moments, rather than their duration.

67.Affective Forecasting:

The act of predicting how you will feel in the future based on how you’re feeling right now.

This effect often makes us desire things that give us happiness only in the moment.

68.Focusing Illusion:

things seem more important than they really are when you think about them.

This is why we worry about things that later turn out to be harmless.

Or why people manage to recover from truly terrible tragedies, even if it doesn’t feel like it in the moment.

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