Thinking, Fast and Slow by Daniel Kahneman
Read August 2013
Summary: Our brains have two metaphorical systems for making decisions: system one uses heuristics and operates with little effort, while system two deals with deep thinking. We use system one as a shortcut because it saves us mental energy, but this often leads to bias, overconfidence and suboptimal choices.
- We often exempt ourselves from the lessons we learn about others.
- Fourfold pattern: We are risk averse when the probability of gain is moderate or the probability of loss is small, but risk seeking when the probability of loss is moderate or probability of gain is small.
- We optimize our experiences for our remembering selves rather than our experiencing selves.
- Focusing illusion: Nothing in life is as important as you think it is when you are thinking about it.
- The way questions and issues are framed (visually, in language, etc.) significantly influences our decisions (e.g., opt-in vs. opt-out).
- When we like someone we often assume they are good at other things, even though we have no proof of that.
- Anchoring Effect, Availability Heuristic, Substitution Effect, Sunk Cost effect.
- "We never let our vacations hang on a last-minute deal. We're willing to pay a lot for certainty."
- "Peak-end rule: The global retrospective rating was well predicted by the average of the level of pain reported at the worst moment of the experience and at its end."
- "What we learn from the past is to maximize the qualities of our future memories, not necessarily of our future experience."
- "At the end of the vacation, all pictures and videos will be destroyed. Furthermore, you will swallow a potion that will wipe out all your memories of the vacation. How would this prospect affect your vacation plans? How much would you be willing to pay for it, relative to a normally memorable vacation?"