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Thinking Fast & Slow presentation

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Information about Thinking Fast & Slow presentation
Business & Mgmt

Published on March 6, 2014

Author: LaureParsons

Source: slideshare.net

Description

An overview of the ideas presented in Daniel Kahneman's Thinking Fast & Slow, with multimedia links
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THINKING FAST & SLOW the (sorta) quick version

DISCLAIMER This is a long presentation that still contains no data and barely summarizes the ideas in the book. For evidence and more ideas, please read the book!

WANT TO READ IT ALL? Buy on Amazon

WANT TO LEARN MORE? Click on the header links.

TWO SYSTEMS

TWO SYSTEMS 1. System One: continuously and involuntarily generates impressions, intuitions, intentions, and feelings

TWO SYSTEMS ! ! ! ! System One: Our gut reaction. How we read expressions, react to sounds, colours, and images. Our immediate intuitions about problems. Not prone to doubt.

TWO SYSTEMS 2. System Two: the conscious, reasoning self that has beliefs, makes choices, and decides what to think about and what to do

TWO SYSTEMS ! ! System Two: A slower, reason-based approach. Considers evidence and questions assumptions. Responsible for socially appropriate behaviour. Can contain conflicting ideas at one time.

TWO SYSTEMS “System 1 is generally very good at what it does: its models of familiar situations are accurate, its short-term predictions are usually accurate as well, and its initial reactions to challenges are swift and generally appropriate. System 1 has biases, however, systematic errors that it is prone to make in specified circumstances. As we shall see, it sometimes answers easier questions than the one it was asked, and it has little understanding of logic and statistics. One further limitation of System 1 is that it cannot be turned off.”

TWO SYSTEMS “As a way to live your life, however, continuous vigilance is not necessarily good, and it is certainly impractical. Constantly questioning our own thinking would be impossibly tedious, and System 2 is much too slow and inefficient to serve as a substitute for System 1 in making routine decisions.The best we can do is a compromise: learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high.The premise of this book is that it is easier to recognize other people’s mistakes than our own.”

TWO SYSTEMS ! ! Note: If our System 2 is engaged or depleted, we will basically believe anything.

SOME COGNITIVE BIASES & ILLUSIONS

PRIMING Give an idea of what might be the category or suggest an answer and we will see things through that bias.

WASH

CHICKEN

SO_P

MARKETING/PRODUCT ! ! Get people to smile, nod, etc. and they will be primed for positive feelings. Even if they just smile physically.

FAMILIARITY Familiarity = truth in our minds.

FAMILIARITY Our minds are inclined to believe unknown things when they sound familiar.

HIGH DEFINITION Our minds are more inclined to believe a message when it’s conveyed in high quality, high contrast formats. I.e. a bright-dark blue for text against white background.

USE SIMPLE LANGUAGE Use simple language (direct wording, fewer metaphors and jargon, fewer syllables when fewer will do). ! Our minds are more inclined to trust and believe simple language. We naturally see complex language as less intelligent and less trustworthy when it’s in a context that could be simpler.

RHYME ! ! ! ! ! ! We are more likely to believe ideas when they are phrased in rhyme. (i.e. a rhyming catchphrase). !

PRONOUNCEABLE NAMES If you quote someone for a testimonial, it’s better to use a source with a name that is easy to pronounce. Generally people feel less trust towards people with names they feel uncomfortable pronouncing (even if this seems intolerant).

BUSINESS PRINCIPALS

CAUSALITY ! ! We are overly quick to ascribe causality. Many things we think are causal are coincidental, based on luck or happenstance.

CAUSALITY “Statistics produce many observations that appear to beg for causal explanations but do not lend themselves to such explanations. Many facts of the world are due to chance, including accidents of sampling. Causal explanations of chance events are inevitably wrong.”

BUSINESS PRINCIPALS We will more often search for evidence that upholds our beliefs than seek to disprove them, even if the beliefs are illogical.

THE ILLUSION OF VALIDITY When you are confident in a prediction or an assessment of a person, company, or idea, even when faced with evidence to the contrary you will continue to believe in the assessment and your mind will construct an argument to support it

THE HALO EFFECT ! ! When you like someone, you are prone to expect they will behave in ways that you approve of. That belief makes you like them even more. (Conversely, when you don’t like someone, you have the expectation they will behave in ways you don’t like).

BUSINESS PRINCIPALS In hiring, this can mean that if you get a good impression of someone in one interview, you won’t give up that impression even if they weren’t as stellar in the next round of interviews. It feels uncomfortable (cognitive dissonance) to feel our impressions aren’t correct. .

WYSIATI ! ! ! ! If you get evidence only from one side of an issue or argument, you will strongly be likely to interpret the situation though that lens. Kahneman calls this “What You See Is All There Is” (WYSIATI)..

WYSIATI WYSIATI also is implicated in a number of other cognitive biases:

OVERCONFIDENCE “As the WYSIATI rule implies, neither the quantity nor the quality of the evidence counts for much in subjective confidence. The confidence that individuals have in their beliefs depends mostly on the quality of the story they can tell about what they see, even if they see little. ! We often fail to allow for the possibility that evidence that should be critical to our judgment is missing—what we see is all there is. Furthermore, our associative system tends to settle on a coherent pattern of activation and suppresses doubt and ambiguity.”

FRAMING EFFECTS “Different ways of presenting the same information often evoke different emotions. The statement that ‘the odds of survival one month after surgery are 90%’ is more reassuring than the equivalent statement that “mortality within one month of surgery is 10%.” ! Similarly, cold cuts described as ’90% fat-free’ are more attractive than when they are described as ’10% fat.’ The equivalence of the alternative formulations is transparent, but an individual normally sees only one formulation, and what she sees is all there is.”

THE LAW OF SMALL NUMBERS “We often think a small sample size is equal to a large sample, even though a small sample is inherently not as trustworthy. We pay more attention to the content of messages than to information about their reliability, and as a result end up with a view of the world around us that is simpler and more coherent than the data justify.”

ANCHORING If you put an initial value on something, it’s a strong influence on how much it’s worth in people’s minds (or if you suggest an answer to something, people will factor their ideas of the answer with that anchor).

BUSINESS PRINCIPALS “Arbitrary rationing is an effective marketing ploy” ! We value something more when it seems scarce, even if the scarcity is artificial.

PLANS “In preparing for battle, I have always found that plans are useless, but planning is indispensable.” -Dwight D. Eisenhower ! If you make a plan, the most effective approach is to consider the ways in which the plan could go wrong. Also, check out the outcomes of similar plans.

THE PRE-MORTEM “The procedure is simple: when the organization has almost come to an important decision but has not formally committed itself, Klein proposes gathering for a brief session a group of individuals who are knowledgeable about the decision. ! The premise of the session is a short speech: “Imagine that we are a year into the future. We implemented the plan as it now exists. The outcome was a disaster. Please take 5 to 10 minutes to write a brief history of that disaster.”

AVAILABILITY BIAS We think things are more common because they receive more attention. We are more likely to ask ourselves “How do I feel about that?” rather than “What do I think about that?” We don’t look at how questions are framed, i.e if a toxic risk is framed in deaths per million or particles of toxin per million.

STEREOTYPING ! ! ! Stereotypes and predicting by representativeness: we often ignore actual statistical information in favour of our own predictions based on familiar traits. ! Stereotyping is not per se “negative” in this context. Our minds need to organize and type things to function.

BUSINESS PRINCIPALS “Anchor your judgment of the probability of an outcome on a plausible base rate.”

BUSINESS PRINCIPALS “Question the diagnosticity of your evidence.”

REGRESSION TO THE MEAN We tend to reward or punish exceptional behavior when in general, those states are a function of luck. Most people and performance regresses to the mean, i.e. if you do very well, you will likely not do as well next time, or if you do very poorly, you will likely improve.

HINDSIGHT ! ! People believe they knew the past would turn out as it did or to blame others for not acting on unknowns.

THE FOCUSING ILLUSION “Nothing in life is as important as you think it is when you are thinking about it.”

HIRING “If you are serious about hiring the best possible person for the job, this is what you should do. First, select a few traits that are prerequisites for success in this position (technical proficiency, engaging personality, reliability, and so on). Don’t overdo it— six dimensions is a good number. ! The traits you choose should be as independent as possible from each other, and you should feel that you can assess them reliably by asking a few factual questions. Next, make a list of those questions for each trait and think about how you will score it, say on a 1–5 scale.You should have an idea of what you will call “very weak” or “very strong.”

HIRING “These preparations should take you half an hour or so, a small investment that can make a significant difference in the quality of the people you hire. To avoid halo effects, you must collect the information on one trait at a time, scoring each before you move on to the next one. Do not skip around. ! To evaluate each candidate, add up the six scores. Firmly resolve that you will hire the candidate whose final score is the highest, even if there is another one whom you like better—try to resist your wish to invent broken legs to change the ranking. ! A vast amount of research offers a promise: you are much more likely to find the best candidate if you use this procedure than if you do what people normally do in such situations, which is to go into the interview unprepared and to make choices by an overall intuitive judgment such as “I looked into his eyes and liked what I saw.”

CONCLUSION: TRUST YOUR GUT BUT THINK TWICE QUESTION ASSUMPTIONS USE DATA WISELY

Thanks! Laure Parsons Chief Storyteller @olark

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