21A – Reading Reflection No. 2

Thinking, Fast and Slow, Daniel Kahneman

1. What was the general theme or argument of the book?

The general theme or argument of the book is that there are two modes of thought, “System 1,” which is fast, instinctive, and emotional, and “System 2,” which is slower, more deliberative, and more logical. The first system is considered by Kahneman to be fast thoughts or thinking that is done almost automatically or instinctively. This is done with little to no effort from the person with no feeling of control. For example, determining that an object is at a greater distance than another, answering simple equations such as 2+2, and knowing the second part of the phrase “bread and…” (butter) is a result of the first system of thinking. It creates a coherent pattern of activated ideas in associative memory and links a sense of cognitive ease to illusions of truth, pleasant feelings, and reduced vigilance. The second system is explained by Kahneman as slow thoughts or involving thinking that is more complex and mentally draining. It requires concentration and agency from the person in order to process thoughts. This system is the conscious self, the version that makes decisions, makes choices, and has reason and beliefs. For example, digging into your memory to recognize a sound, deciding the appropriateness of a particular behavior in a social setting, and determining the validity of a complex logical reasoning is due to the second system of thinking. System 2 is designed to monitor and regulate the thoughts and actions System 1 promotes, controlling them by encouraging, suppressing, or modifying behaviors. System 1 is the main system, but System 2 provides more detailed processing.

2. How did the book, in your opinion, connect with and enhance what you are learning in ENT 3003?

In my opinion, the book connected with and enhanced what I am learning in ENT3003- Principles of Entrepreneurship by addressing fallacies and systematic errors that result in flawed opinions and adverse decision making, or cognitive biases. People assume certain things automatically, without having thought them through carefully. Kahneman refers to these assumptions as heuristics, which can be deadly for entrepreneurs. The first step to overcoming them is by being aware of them. A System 1 heuristic is the ease in which instances come to mind, while a System 2 heuristic is based more on a focus on content with deeper engagement. There is evidence that converges on the conclusion that people who allow themselves to be guided by System 1 are more susceptible to availability biases compared to other people who are in a state of higher vigilance. The concept of risk is a human invention, designed to assist people with the navigation of dangers, fears, and uncertainties. According to Kahneman, there are real dangers and uncertainties, however, the concept or notion of “real risk” or “objective risk” is fabricated. When an incorrect decision is made, both systems are responsible. System 1 suggests the incorrect intuition, and System 2 endorses it and expresses it as a judgement. Although System 2 is slower, more deliberative, and more logical, it is still capable of failure due to two reasons: ignorance and laziness. As an entrepreneur, consciousness can try to solve a problem, but the unconscious can be more creative regarding thinking out of the box. For example, when taking “calculated risks,” the heavier the risk, the more time should be devoted towards it.

3. If you had to design an exercise for this class, based on the book you read, what would that exercise involve?

If I had to design an exercise for this class based on the book I read, the exercise would involve one of the exercises descried in Kahneman’s book called Add-1. First, think of four non-sequential digits that are simple whole numbers. For example, 3295 or 3967. Then, find and set a metronome, there are many free ones online, such as metronomeonline.com. Set the tempo to 88, and while the metronome is playing, add 1 to each digit on each beat. So, if the starting number was 3295, it would become 4306 during the next four beats. For 3967, it would become 4078. You can wait two beats after completing a set of four digits, then you must add one more to the new number. After 4306, it would become 5417. Continue this pattern for as long as possible and remember to stick to the tempo. If the tempo is broken, the exercise is over. Also, if the chain of correct answers is broken, the exercise is also over. This exercise is more challenging when it becomes Add-3 and may require one to write the numbers down on a piece of paper and read them out loud while listening to the metronome. Out of the people that have tried this exercise, it was revealed that many were unable to keep it up for more than 20 seconds. It is possible to successfully do the exercise for long durations of time when people are not rushed into playing it. By removing the restriction of the metronome, it becomes significantly easier to think more clearly and accurately. In a rushed context, we are forced to think quickly, or more wrongly.

4. What was your biggest surprise or 'aha' moment when reading the book? In other words, what did you learn that differed most from your expectations?

My biggest surprise or ‘aha’ moment when reading the book was learning that the world being a predictable, straight-forward, and easy to understand place is an illusion and that people often overestimate how much they understand about the world, particularly underestimating the role of chance. The illusion fuels and feeds the further illusion that someone is capable of predicting and controlling the future. System 1 prompts and encourages people to rely on very little, if any, evidence to jump to radical conclusions and make significant predictions. As human beings, we hold a lot of confidence in our opinions and judgements, without considering the notion of evidence. Kahneman emphasizes that as a result, people have very little or limited knowledge, yet have a lot of confidence in their beliefs. What I learned that differed most from my expectations is that the world is entirely unpredictable, and errors will always be made. However, Kahneman explains that we can learn from these mistakes and that a majority of our decisions and preferences are biased and influenced by memories. Short-term memory is limited, a memory from 15 minutes ago can be recalled differently, which can impact one’s decision making. Humans struggle to think statistically because of a failure to precisely associate reasonable probabilities with outcomes. System 1 involves associating new information with existing patterns or thoughts, as opposed to creating new patterns for each new experience. Someone limited to heuristic thinking would only be able to think of similar historical instances when they are presented with a new dispute, rather than seeing the unique aspects of the occurrence. System 2 typically tends to promote two simultaneous options that are not compatible.