Key Takeaways
The Rabbit Hole is written by Blas Moros. To support, sign up for the newsletter, become a patron, and/or join The Latticework. Original Design by Thilo Konzok.
- People are intuitively poor statisticians
- Studied the role of intuition and how they affect our opinions and outlooks
- Availability heuristic - people biased because of heuristics. Most obvious and prevalent example pops up first (shark attacks although very rare)
- Resemblance and recall often used but don't forget to also think about statistics. Farmer and librarian example where describe somebody shy and think librarian but in fact many more farmers than librarians in the world
- Goal is to provide a view of how the mind works. Drawing on recent cognitive and psychological findings focusing on biases
- Expert intuition strikes as magical when in a special skill but we all have some of it. Detecting anger in voices quickly, etc
- Intuition is nothing more than recognition. Sometimes superior recognition, but recognition nonetheless
- Affect heuristic - make decision based on gut with little use of reason or intellect.
- Fast thinking uses heuristics, intuition and perception/memory and the vast majority of our decisions are made using this systems (but maybe they shouldn't be...)
- Slow thinking based on reason, deliberate thought
- Broad framing - do not consider one risk or gamble in isolation, think of all of them spread over your whole life and will see that this decision actually carries very little risk
- Setting for yourself certain risk policies will help alleviate some of the narrow framing issues and make decisions easier
- In order to avoid hindsight bias, make decisions after very thorough thought or almost none
- Pain and pleasure drives mostly everything. Understand that duration of plays a big role when deciding
- Time matters greatly and need to make decisions around this. Ultimate finite resource in this life
- Nothing in life is as important as you think it is when you are thinking about it
- 2 selves - experiencing self and remembering self (keeps score and makes decisions)
- Make sure to take duration of event into account when making decision
- Start judging decisions by how they were made and not only how they turned out
- Part 1 - fast v slow and how it affects our decisions
- Part 2- updates on judgment heuristics and why so difficult to think statistically
- Part 3- overconfidence due to thinking we know more than we do and not recognizing our supreme ignorance. Underestimate role of chance and our use of hindsight
- Part 4 - economic agents are rational? Examples of human decisions which aren't. Prospect theory
- Part 5- distinction between experiencing self and remembering self. These two have differing Interests
What I got out of it
- We have two systems for basing decisions on - system 1 is the intuitive decision maker and system 2 is the thorough and analytical decision maker. We often rely too much on system 1 and need to be aware of that. Judge your decisions by how they were made as opposed to how they turned out. Somewhat repetitive book but great lessons