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Thinking, Fast and Slow
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on 4 May 2017
Excellent book summarising the foundation of behavioural economics. Discusses the key elements in detail and summarises very effectively in the conclusion. Important knowledge for all, as we all make decisions and judgements, and particularly for those whose decisions carry a heavy weight.
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on 19 December 2016
"Thinking, Fast and Slow" has been a great reading experience. There are some insights on the way people think and decide that are worth analysing.

This book proves that humans are not very good in thinking in terms of probability, even, for example, when they are aware of the actual probability of an event. They'll tend to consider something more or less probable depending on various psychological factors.

Also we often believe that some events are a clear indication of a measurable reality, like the score of a football match, the performance of a company or a stockbroker, and like to ignore statistical fluctuations (which is called "Regression to the mean").

All these elements, and many more, are in contrast with the ideal economical mind, where values, durations, students, even probability of occurrence are always correctly estimated. People are less rational that they like to believe, and being aware of these psychological factors impacting rationality may be useful in our lives.
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on 19 May 2013
This is the sort of book that will either turn you off quickly, or make you spend weeks (months, or years!) thinking about the gems that you will find within.

I found that it left me to consider many of my own actions, and review the actions of those around me - without really giving me an answer on how to deal with them.
Helping to understand how someone has made a decision will undoubtedly help me influence their decisions going forwards, but similarly it will make me suspicious of people influencing me.

I had pre-judged the book after reading a review on here that said the first 200 pages were good and the rest wasn't worthwhile. I kept looking at the page numbers as I closed on 200, and then realised the person who wrote that review obviously wasn't gaining as much from it as me - simply because I wanted to carry on reading and learning from it.

This is the first book I've ever read that I've felt compelled to share with other people, particularly those who wish to get on in life and fulfil their ambitions.
I don't believe it is 5 Star perfect, but it was definitely challenging and thought provoking for me to recommend it to friends.
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on 8 July 2013
A must-read if you are interested in how people think, how the mind works. It is incredible full of knowledge. This book is 418 pages (not including appendixes) of 8-point font, but in any given chapter, the message is actually condensed.

I normally read a book in a week or so, but I have taken more than 2 months to read this one because every concept he touches is so interesting that it seems almost silly not to reflect about it more deeply.

I liked Dan Ariely's books a lot (who, by the way, seems to have been somehow a disciple of Kahnemann), but they now seem to me somewhat "light-weight" compared to this book.

As a minor detail, the only thing missing for me is a a comprehensive summary of concepts explained. He touched on practically everything he has researched in his life (i.e. more than 50 years of fruitful research), so it is easy to forget one concept 3 chapters before. I would have loved to have a summary listing all the concepts described by theme or similar. Several times, I found myself going to places like Wikipedia to find just a list of the concepts he described. To be fair, his last chapter "Conclusions" gives a very broad summary of the book in about 10 pages, and then there is the list of contents at the beginning of the book, but an appendix with a summary table would have been helpful.
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on 25 March 2014
This book will literally change the way you view the world. It dips beneath the ever flowing river of our consciousness and examines the two basic systems that underpin our thinking. There's the fast system which works automatically based on instinct, impressions and emotion and the slower system used to process meatier cognitive tasks.

Kahneman is a psychologist who won the Nobel Prize for economics with his work on the processes that underpin our decision-making and judgement. This book is a very effective distillation of his thinking and of the vast range of experiments he has been involved in over the years which have elucidated this very precise set of understandings about our thinking. We are subject to cognitive illusions, automatic ways our thinking responds before we are even aware of it. One of the best examples of this is the Muller-Lyer parallel lines which, even though we know each line is the same length, the differently angled fins force our system 1 processes to assess as line of unequal length.

It is a bit heavy going in places but well worth the effort for the self-knowledge we pick up by the end.
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on 27 November 2012
Thinking, Fast and Slow is a summary of Daniel Kahneman's ground-breaking life work (done with his friend and collaborator, Amos Tversky) on prospect theory and human heuristics. Their work challenged the assumptions of traditional economics - that humans are rational, utility-maximising, efficient information-processing creatures. Kahneman demonstrates convincingly that humans are indeed rational, but not in the sense that economics profession assumes.

Take loss aversion, for instance. Humans in traditional economic models (homo economicus) base decisions on expected utility - a fuzzy measure of how much `satisfaction' a person obtains from taking a given action. According to this model, if a person loses $1,000 she suffers the same utility loss as she gains if she wins $1,000. Kahneman and Tversky, by careful experimentation, show that people are more loss averse than the rational economics model would assume. Losses weigh more in people's minds that corresponding gains. As such, people are prepared to pay a premium in order to avoid loss.

Kahneman also documents other aspects of human decision-making that are not explained well - or even explained away - by traditional economics. He characterizes the human decision making apparatus into two parts, system 1 and system 2. System 1 is intuitive, effortless, and quick to seek answers (think Homer Simpson). System 2 is (non)linear, analytical, but demands cognitive a lot of fuel to get started (think Mr. Spock in Star Trek). Due to the amount of cognitive load that we have to process each day, system 1 is remarkably efficient in providing `good enough' answers through heuristics. However, system 1 can be quite sloppy when we need to carefully process information.
I was a believer when I bought the book; I needed no convincing about human heuristics and the limitations of uber-rationalism as assumed by the economics profession. I was pleased, therefore, that Kahneman did not waste too much space vilifying the proponents of the traditional economic model. Instead, he creatively reported his life's work and openly admitted limitations in his own research. Furthermore, he also acknowledged the contribution of economics to our understanding of aggregated patterns of human behavior. Don't write off traditional economics just yet.

That humans are not rational in the traditional economic sense does not mean that we are irrational. Kahneman shows that we are rational, but in a different sort way. Kahneman's work does not intend to supplant economics; instead, it contributes to our understanding of human behavior. That way, we can design better solutions to such problems in areas such as financial planning, pensions, retirement, and blood donation. Thinking, Fast and Slow is a wonderful, well-written book. It offers a corrective to the libertarian conception of human reason. The book invites the reader to be reflective and suspicious of social policy that assumes human uber-rationality. Such a well-delivered message deserves four stars.
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on 19 December 2017
This is a cracking read. Very insightful about the workings of the human mind. There is some profound truth to be found on every single page. No padding whatever. It is not a book that you are likely to be able to consume in a single session. If you think that we know everything about the mind then you will realise how much there is still to learn. Kahneman's remarks about the wisdom of relying on experts and the interpretation of statistics are absolute gold dust. A Nobel Prize well deserved.
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on 30 January 2016
He wanted to tell people how dumb they were and was surprised when they didn't give him a medal. His fellow psychologists were apparently quite nasty to him. Now our hero has forsaken revolution and admits that people behave rationally most of the time. Yet there is ample evidence that this apparent conversion is a fake.

His central theme is that people behave rationally most of the time yet he also says that the rational part of the brain is like a supporting actor who deludes herself she is in the leading role. There is an endless yo-yoing between these two opposite poles throughout the book. It seems as though the author can't make up his own mind.

Contradictions abound, another obvious example is in the field of behavioural finance where his enthusiasm/contempt for forecasting allows him to both berate and commend its users at different points in the book. This straying beyond his expertise is something that he warns us is likely to happen to anybody.

His mantra is that people can be rational if they try and he exhorts us to think slower and engage the part of the brain that is capable of rational thinking. Yet thinking slower evidently hasn't made it possible for the author to produce a rational book.

A bit of a leg-pull, perhaps, an elaborate hoax? If so, this brand new 'Looking Glass Book' must be Kahneman's revenge for all those decades of persecution. It's a joke with purpose. If people see the joke, the rationality hypothesis is supported, they are not so dumb, after all. If on the other hand people are taken in, the hypothesis must be false and we are back where we started. No wonder so many people are raving about this book!
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on 5 April 2018
Certainly the most thought provoking book I've read in a long time, so much so I've written a blog about it's conclusion and the impact on social media. More importantly how people are being manipulated on social media by people using the "techniques" outline in this book.
It's not an easy book to read so not one for the beach, but push through and there is a light at the end of the tunnel.
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on 13 January 2013
Every so often a book comes along that pulls up the blinds to reveal stunning vistas. Kahneman's book is like walking from room to room in a mansion, following behind a kindly gentleman who draws curtains and blinds and drapes to reveal view after view. At the end of the tour he takes you to a vantage point from which you can appreciate the entire panorama.

Daniel Kahneman has had an enormous impact on the disciplines of risk perception and behavioural economics. In Thinking, Fast and Slow he explains the two ways that we think - the intuitive System 1, which does the fast thinking; and the effortful but slow System 2, which monitors System 1 and performs specified calculations. He also introduces us to the two species: Econs, who live rational lives in the land of economic theory, and Humans, who act in the real world. Finally, he looks at two versions of ourselves: the experiencing self that does the living; and the experiencing self that keeps score and makes choices.

The book summarises a huge amount of academic work that is directly relevant to the management of risk such as heuristics, biases, overconfidence and choices. It is written in an accessible way without the jounalistic breeziness of Malcolm Gladwell (Tipping Point) or the jokiness of Dan Ariely (The (Honest) Truth about Dishonesty). Two seminal articles are reproduced as Appendices: Judgement under Uncertainty and Choices Values and Frames.

Thinking, Fast and Slow is great reading for anyone interested in understanding the psychology that shapes the management of risk.
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