This amazing book is full of psychological explanations for the irrational behaviour of people. Because a summary of the book would have been about as long as the book itself, I only describe a few facts that I found most interesting. Like the reason why people participate in lotteries knowing that the statistical opportunity is incredibly small to win, why people overestimate themselves, and how it is that you deviate from your good intentions in busy periods.
THE TWO SYSTEMS
According to the theory of Kahneman, every person has two types of systems from which one acts:
System 1 works automatically and quickly based on impressions, promptings, intentions, and feelings. The use of System 1 requires little effort and is difficult to keep under control.
System 2 provides conscious attention to the mental effort, the rational. This costs energy and is used to suppress impressions of system 1, which ensures self-control.
Both the use of System 2 and switching between tasks within system 2 costs energy, unless people are in flow. A state of effortless concentration that goes so deep that the sense of time, of yourself and of problems is completely lost. When System 2 is overworked, System 1 has more influence on the behaviour, and we lose our self-control. For example, on a stressful working day, we suddenly deviate from our (rational) good intention to stop eating at work. The idea that the first suggestion is the right answer is not correct. Because it sounds so logical (from system 1) it is difficult to think further (System 2) and most people do not.
THE SKILL OF THE EXPERT
Herbert Simon describes that intuition is nothing other than recognition (System 1). A situation provides a clue, this clue gives access to information in a person's memory and this information what leads to an answer. This means that Intuition can only be trusted when there is a degree of skill. According to Kahneman, skill comes about from two basic conditions:
The environment in which someone operates must be sufficiently regular to be predictable.
The person must have had the opportunity to practice for a long time in the regular environment.
TREASURES WITHOUT BIAS
People who are asked to make an estimate generally only use their intuition, which in the absence of skill usually leads to invalid estimates. Using a statistical average to adjust your estimate makes estimates a lot more valid. Kahneman describes four steps:
Start an estimate of the average value.
Determine the value of the specific situation on the basis of instructions based on intuition.
Estimate the correlation between the directions and the average.
If the correlation is 0.30, shift 30% from the average towards the intuitive estimate.
PROSPECT THEORY
Amos and Kahneman developed a prospect theory in which on the basis of probability and psychological reactions of people - aversion to loss & hope for profit risk is looked for, or avoided. A few interesting conclusions concerns the four quadrants:
When there is a small chance of winning a lot of money, people get hope for profit and are therefore at risk, as with lotteries.
When there is a big chance to win a lot of money, people are afraid to be disappointed and get a dislike of risk. This means that people with unfavourable regulations, such as a settlement in court, arrange it.
When there is a big chance of making a big loss, people are at risk of preventing it.
When there is little chance of making big losses, people have an aversion to risk. As a result, they accept unfavourable regulations, such as expensive insurances.
PSYCHOLOGICAL EFFECTS
A number of psychological aspects that can deceive system 1:
Mere exposure effect, regular exposure to a word or face make us judge that word or face more positively. Even if the exposure goes so fast that we do not realize it. (System 1 ensures recognition of a word or face, without context)
Position test strategy (or confirmation bias), our associative memory will judge a situation on the basis of how the question is asked. Eg. Is Sam unkind? Or is Sam nice?
Halo-Effect, the tendency to value (or detest) everything from someone, including aspects that you have not yet experienced. (1st impressions are stored in System 1). For example: what do you think of the following persons? Jan: Intelligent / active / impulsive / critical / stubborn / jealous Kees: Jealous / stubborn / critical / impulsive / active / intelligent
Reference effect. When people have to judge a value, it is influenced by a reference value, even if it has absolutely nothing to do with the question. With questions about a donation for a good cause, a reference level of 5 dollars yielded an average of 20 dollars, and a reference of 400 euros averaged 143 dollars.
Availability bias, the easier system 1 retrieves examples from memory, the truer a statement seems. Ask a couple the percentage of personal contribution to household tasks and both will overestimate themselves (resulting in the sum of both over 100%). But, the harder it becomes to quote examples, the less convinced subjects are. For example, people judge themselves more assertively when they have to give three examples of assertive behaviour than when they have to name 12.
