1/10/2024 0 Comments Thinking fast and slow![]() ![]() They might as well be handed out on the roll of a die: they're completely unjustified. The fact remains that "performance bonuses" are awarded for luck, not skill. There is a tremendously powerful illusion that sustains managers in their belief their results, when good, are the result of skill Kahneman explains how the illusion works. Analysis of the performance of fund managers over the longer term proves conclusively that you'd do just as well if you entrusted your financial decisions to a monkey throwing darts at a board. We also hugely underestimate the role of chance in life (this is System 1's work). One of the best books on this subject, a 2002 effort by the psychologist Timothy D Wilson, is appropriately called Strangers to Ourselves. If you hold a pencil between your teeth, forcing your mouth into the shape of a smile, you'll find a cartoon funnier than if you hold the pencil pointing forward, by pursing your lips round it in a frown-inducing way. It turns out (to simplify only slightly) that it is their blood-sugar levels really sitting in judgment. Judges think they make considered decisions about parole based strictly on the facts of the case. That's a System-1 exaggeration, for sure, but there's more truth in it than you can easily imagine. We don't know who we are or what we're like, we don't know what we're really doing and we don't know why we're doing it. Since then, thousands of other experiments have been conducted, right across the broad board of human life, all to the same general effect. If there was a dime, no fewer than 88% helped. If there was no dime in the phone booth, only 4% of the exiting callers helped to pick up the papers. Sometimes a dime had been placed in the phone booth, sometimes not (a dime was then enough to make a call). Each time a person came out of the booth after having made a call, an accident was staged – someone dropped all her papers on the pavement. One famous (pre-mobile phone) experiment centred on a New York City phone booth. We're astonishingly susceptible to being influenced – puppeted – by features of our surroundings in ways we don't suspect. ![]() The general point about the size of our self-ignorance extends beyond the details of Systems 1 and 2. It's hopelessly bad at the kind of statistical thinking often required for good decisions, it jumps wildly to conclusions and it's subject to a fantastic suite of irrational biases and interference effects (the halo effect, the "Florida effect", framing effects, anchoring effects, the confirmation bias, outcome bias, hindsight bias, availability bias, the focusing illusion, and so on). It loves to simplify, to assume WYSIATI ("what you see is all there is"), even as it gossips and embroiders and confabulates. It does, however, pay a high price for speed. Système 1 a ses raisons que Système 2 ne connaît point, as Pascal might have said. It's often right to do so, because System 1 is for the most part pretty good at what it does it's highly sensitive to subtle environmental cues, signs of danger, and so on. System 2 is slothful, and tires easily (a process called "ego depletion") – so it usually accepts what System 1 tells it. Kahneman compares System 2 to a supporting character who believes herself to be the lead actor and often has little idea of what's going on. You're wrong to identify with System 2, for you are also and equally and profoundly System 1. It's "the conscious being you call 'I'", and one of Kahneman's main points is that this is a mistake. (To set it going now, ask yourself the question "What is 13 x 27?" And to see how it hogs attention, go to /videos.html and follow the instructions faithfully.) System 2 takes over, rather unwillingly, when things get difficult. Its operations involve no sense of intentional control, but it's the "secret author of many of the choices and judgments you make" and it's the hero of Daniel Kahneman's alarming, intellectually aerobic book Thinking, Fast and Slow. System 1 is fast it's intuitive, associative, metaphorical, automatic, impressionistic, and it can't be switched off. We now know that we apprehend the world in two radically opposed ways, employing two fundamentally different modes of thought: "System 1" and "System 2". These days, the bulk of the explanation is done by something else: the "dual-process" model of the brain.
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