My rating: 4 out of 5
Shortly after I started reading this book I read an article on taking smart notes and so I naturally applied it for recording interesting quotes and tidbits from this book. Following is not even close to all of my notes, but more their condensed summary.
I no longer remember why exactly I added the book to my reading list. It’s in one of my self-improvement drawer. And in that regard I think I will have a hard time practically using things I learned from this book. As even the author himself noted - even decades of studying this field has not helped his intuition too much. There are several reasons for this - most notably that the errors in our judgement often come from “System 1” in our head - the intuitive, quick associative memory that mostly runs amok and makes split-second decisions throughout our lives. The slower, logical part of our brain (System 2) only takes over occasionally when it detects a problem. And the crux of the issue is that more often than not - we will not notice an issue until way too late.
One of the recurring topics is the feud between “rational” school of economics and the psychologists. The simplistic economic theory treats all actors as rational, always having all the information and making the best decisions. I find it self-evident that is absolutely not the case. Humans are maybe not downright irrational, but certainly prone to making less-than ideal decisions due to various reasons.
The book itself is full of examples and references to experiments that you get to replicate in your own head. In most of these, the reason for the example is to show you how your intuition and brain makes incorrect decisions. And there are plenty reasons why we falter. Some are more commonly known cognitive biases. The priming effect, anchoring, sunk cost fallacy, planning fallacy and more.
In my head I have a list of situations in which I would love my “logical self” (System 2) to engage and carefully consider things. When people throw percentages, probabilities or similar numbers in my direction and expect some decision for example. Or maybe I would love to do a premortem (just as you are about to finalize a decision imagine that you are a year in the future it turned out terribly - write what went wrong).
One excerpt/example from the book (in my own words so any mistakes are my own). On the topic of emotional framing there was this experiment:
Participants were told to imagine they were given 50 USD. Then they were given one of the following options:
- You can keep 20 USD or gamble and possibly lose it all
- You can lose 30 USD or gamble to keep the whole sum
Before you read the below “spoiler” try to first answer what you would choose in each of the cases based on a gut feeling. Then think about it a bit more and compare.
As you probably expect - most people will play it safe and take 20 USD if given the first formulation (frame) and gamble in the second (even though options are ultimately the same). Some individuals are more resilient and can resist this framing effect, but on average people tend to play it safe (take no decision). But if they feel their options are bad, they will more likely try to gamble.
Plenty more could be written on the book (especially since I kept copious notes this time around). All in all - I have definitely found a lot of surprises and feel like I’ve learned something about humanity as a whole. Fingers crossed I’ll remember it next time I’ll need it.