The one-sentence summary

Be aware that your brain has two systems – fast intuition and slower conscious thought – and allow for these when looking at decisions.

WHAT THE BOOK SAYS THINKING FAST AND SLOW

  • This is the first book for a non-specialist audience from the Nobel prize-winning psychologist – effectively the father of Behavioural Economics.
  • He divides the mind into two systems:

System 1: makes fast, intuitive decisions based on associative memory, vivid images and emotional reactions.

System 2: slower, conscious, hard thought – more rational but frequently overridden.

  • Collected here are hundreds of examples of how we make a lot of surprising mistakes in thinking – conscious and unconscious.
  • In the Halo Effect, we assume that if a person is good at one thing, they are good at another.
  • Loss aversion makes us dislike losses much more than gains of an equivalent size.
  • WYSIATI (What You See Is All There Is) involves jumping to conclusions based on limited evidence and is crucial to System 1 thinking.
  • The affect heuristic involves people making judgements based on their emotions: (How do I feel about it?) becomes a surrogate for a much harder question (What do I think about it?).

WHAT’S GOOD ABOUT IT

  • The idea that rationality is a restrictive idea is interesting: so-called Econs would operate without emotion and purely based on win/lose criteria, whereas Humans are susceptible to priming, framing, loss aversion, WYSIATI and much more.
  • The mental shotgun means that we often compute more than we need – not something that we can do much about.
  • The anchoring index can be applied to any situation in which a fact is offered in advance of a question – responses are almost always framed in that context.
  • An availability cascade is a self-sustaining chain of events based on emotion (rather than fact) that can become policy – one isolated event becomes a national phenomenon.
  • The premortem is a good concept. Just before committing to something important, imagine you are a year later and that it has been a disaster – write a short history of what happened.

WHAT YOU HAVE TO WATCH

  • This could be the most intelligent and complicated book you will ever read – at over 400 pages it is not for the faint-hearted. On the other hand, it probably covers almost every decision-making circumstance you are ever likely to face.