Thinking, Fast and Slow (Summary)
A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? If you instantly thought '10 cents,' your brain just played a trick on you—the same trick it plays on you hundreds of times a day, leading to flawed judgments about everything from your finances to your happiness. The correct answer is 5 cents.
The First Number You Hear Hijacks Your Brain
We are surprisingly susceptible to 'anchoring,' where an initial, often irrelevant, number heavily influences our subsequent estimates and decisions.
In an experiment, experienced German judges were asked to sentence a shoplifter. Before giving their sentence, they rolled a pair of loaded dice that always landed on either 3 or 9. The judges who rolled a 9 gave an average sentence of 8 months, while those who rolled a 3 gave an average of 5 months. Their professional judgment was unconsciously anchored by a random number.
We Make Decisions with Blatantly Incomplete Information
Our minds are brilliant at creating coherent stories from the limited information available, a phenomenon Kahneman calls 'What You See Is All There Is' (WYSIATI). This makes us overconfident and blind to what we don't know.
Consider a candidate described as 'intelligent and strong.' We immediately form a positive impression and might even assume they're a good leader. We don't stop to think, 'What if they are also cruel and corrupt?' System 1 creates a plausible story from the available evidence and ignores the missing pieces.
The Pain of Losing Is Twice as Powerful as the Pleasure of Gaining
This is the core of Prospect Theory. We are wired for 'loss aversion,' meaning we feel the sting of a loss far more intensely than the joy of an equivalent gain, which makes us irrationally risk-averse.
Most people would refuse a bet where they have a 50/50 chance to either win $150 or lose $100. Even though the potential gain is larger than the potential loss, the psychological pain of losing $100 is more powerful than the pleasure of winning $150.
We Substitute Hard Questions with Easy Ones
When faced with a complex question, our brain often unconsciously swaps it for a simpler one and answers that instead, without us even noticing the switch.
When asked the difficult question, 'How happy are you with your life these days?', people tend to substitute it with the easier question, 'What is my mood right now?'. This is why a simple thing like finding a dime on the floor can temporarily lead people to report significantly higher levels of overall life satisfaction.
