Thinking - Fast and Slow
Daniel Kahneman

by

Nina Calhoun

Themes
Themes are described as ideas that dominate a particular piece of literature. In almost all cases, pieces of literature will be centered a theme or a number of them.
Two Systems

Thinking, Fast and Slow is an exceptional book that focuses on “two systems” which Kahneman adopts to elucidate the functioning of the mind. System 1, or fast thinking, deal with automatic operations in which very little or no effort is required. This system is relatively involuntary and detects primary occurrences such as sounds, distance, and aggression in a voice. Usually, System 1 adopts skills through one’s professional experiences and past encounters. Also, this system facilitates quick decision-making even for experts when assessing complex situations.

Conversely, System 2, also referred to as slow thinking, is the part of the mind that facilitates the processing of complex computations and activities. System 2 is highly dependent on one’s capability to pay attention. People use this system to derive logical conclusions from complicated situations such as arguments. System 2 is usually tiring, as it requires time and energy to review a condition. Kahneman uses the two systems to bring out two significant themes in his book: human irrationality and overconfidence.

Human Irrationality

Kahneman’s book provides a series of counterarguments that the human brain is generally rational and logical. The author explicitly derives theories that challenge this assumption and which show the discrepancy between rationality and intelligence. While intelligence equips people with models with which they can establish sound judgment of events and actions, some known intelligent individuals such as experts have been found guilty of cognitive intuitions (Oaksford & Hall, 2016; Rosenzweig 2014). Irrational thinking covers most of Kahneman’s book and is a theme that he employs to delineate the biases of intuition in human minds. The book is comprised of three major phases in which irrationality is expounded.

First, Kahneman takes the reader through a series of experiments that he and Tversky did, and which reveals numerous cognitive biases. Kahneman defines cognitive biases as errors than a person is prone to make in their unconscious state of mind, which in effect distort reasoning (Holt, 2011). The second phase encompasses some errors in logic as established by economic models and theories. In this phase, the duo took experiments from which they derived some substantial proof that individuals behave differently under uncertain circumstances as opposed to the assumptions established by most economists. Mostly, people do not necessarily crave to maximize utility. Instead, the two developed a counter model, which they referred to like the prospect theory. It is worth noting that it was this particular part of Kahneman’s achievements in the book that awarded him the Nobel. The last phase in the book entails Kahneman’s reasoning which he refers to as the hedonic psychology. He developed this theory a short while after the demise of Amos Tversky.

Kahneman astonishingly uses the three phases to elucidate the flaws of the human mind in the day-to-day decisions that people make. Biased judgment occurs in System 1 through intuitive prediction and usually results in trouble. The author dismantles the long known assumption that human beings are generally rational. Cognitive biases are only eradicable through System 2, which usually takes a while to analyze and look into the matter at hand before deriving a sound conclusion. Most people, therefore, make irrational decisions in haste and where an urgent need for such choices arise. Sound decisions require a structured analytical approach, which is highly unlikely to occur in a situation needing quick action. Irrationality, as depicted by Kahneman, is a concept whose applications cut across various disciplines and professions. Intelligence agencies such as the CIA apply the functioning of the two systems in deriving a cogent analysis of different intelligence procedures. Economists, on the other hand, are no exception to Kahneman’s theory of cognitive biases. As aforementioned, irrationality and the prospect theory tends to elucidate some concerns that most economists erroneously ignore when assessing utility.

Overconfidence

Kahneman’s book sheds more light on aspects relating to a person’s confidence when evaluating choices or detecting flaws as well as predicting future occurrences. One of his chapters, “Expert Intuition: When Can We Trust It,” elucidates on vital aspects that look into the general understanding of confidence based on one’s skills and knowledge as well as experience. In one of his concise illustrations, Kahneman proves that indeed, some situations do not necessarily require radical reasoning and interpretation of data to infer meaningful responses. He shares an instance where several artists were gathered in an expedition and shown an artifact with some flaws. Unsurprisingly, all artist could quickly detect the fault in the piece of art shown to them. What remains intriguing, however, is that all of them could hardly tell why they were so convinced that the artifact had some errors explicitly. This observation formed the basis of Kahneman’s argument regarding overconfidence.

Kahneman developed the approach of overconfidence with Gary Klein, with whom he concluded that expert’s confidence is highly intuitive hence unreliable when proving validity. A professional has to meet two significant thresholds for their instinctive faith to be considered valid. First, one has to be in an environment that permits the predictability of events. Second, experts have to undergo a significant amount of time in the field of their professionalism which will enable them to acquire sufficient knowledge and skills regarding the issues that they are likely to encounter in the ordinary course of their work. Overconfidence, as the author finds, challenges an individual to seek more knowledge and skills, thereby keeping System 2 at work. An individual, in turn, seeks analysis of events and activities as well as an in-depth causal evaluation of choices. System 2 is deliberate, and infuses a person to review circumstances to permit informed judgement consciously. Kahneman mentions several factors that diminish overconfidence of an individual, such as putting on a frown. When the mind detects a flaw as a result of overconfidence, the two systems collaborate to assess the matter as soon as an individual is alert of such an occurrence. System 1 detects and suggests the incorrectness of the reasoning or conclusions, while System 2 adopts a methodology that critically evaluates the situation.

The tendency to be overconfidence arises when one is convinced that they know or understand something, which in reality do not. Kahneman argues that people tend to overestimate their knowledge about the world as it is while underestimating the role played by critical facets such as chance. The author employs the works of Nassim Taleb (who authored “The Back Swan”) in elucidating this theme and shedding more light on understanding the two systems. He finds that people are more likely to assert the existence of something if it relates to a conclusion that is valid. In essence, people tend to have subjective confidence on some crucial matters affecting their lives and that of others. The resultant effect is an occasion where the mind suppresses doubt and complexities while inclining on positivity about a thought on an occurrence.

Additionally, overconfidence may result from intuitive predictions, whereby the mind assesses the possible positive occurrences and uses them to forecast the future expectations (Mohr, 2014). While intuitive prediction is often favorable and motivating to an individual, it may be overly trusted hence the need to take a significant amount of time in assessing the situation at hand. Mohr (2014) argues that this assessment entails evaluating evidence and regressing the prediction towards the mean.

Kahneman’s approach to overconfidence applies in various facets of the society and expertise. Investors, for instance, employ the concept in assessing an individual’s prerogative regarding matters such as risks and returns. Rosenzweig (2014) argues that leadership including investment entails a variety of risk-seeking people, who have unrealistic confidence of success. Nonetheless, Kahneman advocates for a reasonable analysis of an investment decision and a critical consideration of factors that may influence such success (Carlson, 2013). The author employs some principles to explain how professionals indulge in personal confidence. The framing concept holds that the manner in which people frame expectations affect their faith on such outcomes. The idea of overconfidence cuts across various chapters of Kahneman’s book, thereby making it a critical concern of cognitive intuition. In sports, overconfidence and over-expectations are not new either. Most athletes highly disregard overconfidence on the premise that it causes them to underestimate their opponents and hence limit their actions during a game.

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