Daniel Kahneman - Thinking, Fast and Slow
1. Presents conclusions about human decision-making as the interaction of two
characters, System 1 and System 2:
A. System 1 - Thinks fast and intuitively by association
1. Most of the time S1 is very good at what it does
a. Its models of familiar situations are accurate
b. its short term predictions are usually accurate
c. Its initial reactions to challenges are swift and
generally appropriate.
2. S1 has biases/limitations
a. Sometimes answers easier questions rather than the
one that was asked
b. Has little understanding of statistics and logic
c. It cannot be turned off
B. System 2 - Thinks slow, with effort, using logic and data
1. What S2 is good at:
a. Takes over when S1 model of the world is violated
b. Focus attention and memory to makes sense of a
surprising event
c. Continuously monitors your behavior and controls to
prevent errors of judgment and action
2. Limitations of S2:
a. S2 is lazy - usually only a fraction of its capacity is
engaged
b. We identify with S2 and believe it is always in control,
an illusion
c. S2 Usually adopts the suggestions of system 1 with
little or no modifications.
C. The relationship between System 1 and System 2
- System 1 cannot be controlled or changed by System 2
- System 2 assesses the choices of System 1
- System 2 is often "lazy" and misses the intuitive illusions of
System 1
- We identify with System 2
D. Our greatest challenge:
1. We can be blind to the obvious - the gorilla video
2. We can be blind to our blindness - two lines illusion
E. Kahneman's work is a challenge to the assumptions of economic
theories
- Economic theory assumes that System 2 (the "econ") is in
complete control
- Kahneman's prospect theory assumes that no one is in
control and System 2 is lazy
2. Typical illusions generated by System 1 that mark a likely (WYSIATI)
decision bias:
a. Answering the easier question (9)
b. The law of small numbers (10)
c. Anchors (11)
d. The science of availability (12)
e. Availability, emotion and Risk (13)
f. Tom W's specialty (14)
g. Linda: Less is more (15)
h. Causes trump statistics (16)
i. Regression to the Mean (17)
j. Taming intuitive Predictions (18)
k. The illusion of understanding (19)
l. The illusion of Validity (20)
m. Intuitions vs. formulas (21)
3. Implications for Leadership, i.e., leading for results

Surprise is always an invitation to slow (S2) thinking

Recognition of typical kinds of illusions/biases can call up S2 thinking

Dialogue among diverse perspectives invites slow (S2) thinking

Challenge the causal (S1) “stories” we create to explain things, i.e., premortem assessment

WYSIATI  Look for what information is missing