Thinking Fast & Slow by Daniel Kahneman

Thinking Fast & Slow by Daniel Kahneman Student Name Institutional Affiliation Thinking Fast & Slow by Daniel Kahneman Introduction Daniel Kahneman is a psychologist and economist who won the Nobel memorial prize in 2002 for his outstanding contribution to the study of the psychology of judgment and decision-making, as well as behavioral economics. His works are aimed at challenging the assumptions of human rationality and it is the leitmotif of the book, Thinking Fast and Slow. He explores several ideas throughout the book which he has split into five sections with each section specifically focusing on a single aspect of how we think the way we do. One of the main ideas he explores what he terms as ‘two systems’ in our minds. He describes the first system as fast and automatic and the second as slow and logical. This forms the basis of the rest of the arguments he discusses throughout the book in the subsequent sections. Understanding the two systems is key to understanding the rest of the book. In the second section, he explores anchoring, biases and ordering effects explaining how people tend to guess the value of something when they lack sufficient information to form accurate judgments. Thirdly, he discusses concepts that make people be overconfident whilst they are wrong. In the fourth section, he discusses choices where he covers the concept of loss aversion among others. Lastly, he discusses two selves and how we are wired to have internal conflicts in our decision-making processes. These are the sketch ideas that Kahneman has explored throughout the book and they illuminate at how humans are naturally irrational and how they can address that issue. I will do a more detailed review of each section as Kahneman has explored them and discuss their overarching themes. Two Systems In the first section, Kahneman discusses two systems of thinking which he believes every person has. System 1 which he considers fast and automatic. It is the system that autocompletes and makes general conclusions based on sketchy information. It is the system that autocompletes ‘bread and….’. Kahneman notes that this system does not require focus or deliberate effort and it is just instinctive. He also notes that it is very influential in our lives. It is a product of our evolutionary machinery and it has come to help us to survive. It is not always right but if it is trained hard enough it can become intuitive. It follows the principle by Gladwell that it takes about 10,000 hours of training to master a skill. Simply, it is usually the process of making System 1 to become automatic with decision making after the training. We can strive to learn how to silence system 1 in a more complex situation and engage system 2 to help make rational decisions. Kahneman describes System 2 as logical and slow. He claims that it takes a deliberate effort to engage it. System 2 evaluates the information it has and tries to make sense of it to come up with a logical answer. Since System 2 is deliberate, it needs more energy to activate and engage. It is the support system of System 1 when it hits a snag and cannot come up with an automatic response. Since it is mentally draining, it takes concentration and it is evident physiologically. The pupil...