Recently read the book “Thinking fast and slow” by Daniel Kahneman. Highly recommend the book to anyone interested in decision making and thinking.
I liked the book right from the beginning. In the introduction, Kahneman describes his collaboration with Amos Tversky as follows — “The pleasure we found in working together made us exceptionally patient; it is much easier to strive for perfection when you are never bored … We were sufficiently similar to understand each other easily, and sufficiently different to surprise each other”. Beautiful! I think the last part holds true for any great collaboration.
Endowment effect: everything else being equal, you expect more payment to sell X than what you are willing to pay for X.
Halo effect: Quoting wikipedia, “… it is the transfer of the beliefs about a good trait a person may have onto their other traits.”
Availability heuristic: Quoting wikipedia, “if you can think of it, it must be important”. It explains why we overestimate the risk of things based on what we are exposed to frequently.
Base rate fallacy: you tend to ignore the denominator when comparing fractions (duh!)
Substitution heuristic: When you are asked a difficult question, you sometimes tend to answer a different easier-to-answer question without even realizing the substitution.
On feedback: What kind of feedback is useful? Criticizing when they make mistakes or appreciating when they perform well? We usually just criticize when people make mistakes and rarely appreciate when they perform well. As people usually tend to perform better after a mistake, we tend to think that negative feedback is better. But if the mistakes are randomly distributed, the improvement in performance after a bad performance could be just a ‘regression to the mean’ effect. We could have the causality wrong — it’s fascinating that we never bother to think of alternative explanation for events.
I particularly loved the section on “experiencing vs remembering self”. I have thought about this paradox of happiness before, but obviously, Kahneman explains it much better. Some actions may give you good experiences, but when you store them in your memory and retrieve, you may not feel the same happiness. For instance, you might consider it as a wasteful investment of your time/ it may feel “wrong” since it may not sit well with your conscience — in general, it might be some average experience and nothing exceptional. Say you enjoy listening to songs for a couple of hours. If you think about that experience now, do you still derive the same amount of happiness? Probably not. Consider some exciting experience like skydiving or meeting a couple of your friends after a long time — Even the memory of it gives you a lot more happiness. Cumulatively, you may derive a lot more happiness from listening to music than activities like these, but you still to value the latter events more (maybe if you met your friends frequent enough, you might not like them that much :)). He proposes an interesting thought experiment: Say you are trying to choose between two experiences X and Y and you choose X because X will make a good memory. If someone can wipe your memory right after the experience, would you still choose X? If no, then you should think more. We tend to think of the future as anticipated memories and do not evaluate the experiences themselves. Kahneman calls it the “tyranny of the remembering self”. If you are interested, you can hear more about this in his TED talk, “The riddle of experience vs. memory“.
I will end with a quote from the book —
“Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.”