From a lecture by Daniel Kahneman, presented by Skep­tics Society at CalTech, Sunday, November 6, 2011.

In Thinking, fast and slow (2011), Kahneman takes us on a ground­breaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intu­itive and emotional; System 2 is slower, more delib­er­a­tive and more logical. Kahneman exposes the extra­or­di­nary capa­bil­i­ties — and also the faults and biases — of fast thinking, and reveals the perva­sive influ­ence of intu­itive impres­sions on our thoughts and behavior. The impact of loss aver­sion and over­con­fi­dence on corpo­rate strate­gies, the diffi­cul­ties of predicting what will make us happy in the future, the chal­lenges of prop­erly framing risks at work and at home, the profound effect of cogni­tive biases on every­thing from playing the stock market to plan­ning the next vaca­tion — each of these can be under­stood only by knowing how the two systems work together to shape our judg­ments and deci­sions.

Engaging the reader in a lively conver­sa­tion about how we think, Kahneman reveals where we can and cannot trust our intu­itions and how we can tap into the bene­fits of slow thinking. He offers prac­tical and enlight­ening insights into how choices are made in both our busi­ness and our personal lives — and how we can use different tech­niques to guard against the mental glitches that often get us into trouble. Thinking, fast and slow will trans­form the way you think about thinking. — Publisher’s promo­tion

Two types of thinking

System 1, intu­itive, fast — oper­ates with little or no effort.
System 2, slow — requires mental effort, includes complex compu­ta­tions, concen­tra­tion.

Expert opinion

The quality of expert opinion is related to the amount of chaos in the expert’s envi­ron­ment. The more stable envi­ron­ment, the better chance for quality infor­ma­tion.

An “expert” on long-term impact of the stock market is not as reli­able because the stock market increases in complexity as the focus moves from micro to daily, weekly, yearly, century.

Confusing “knowing” and “thinking”

You may hear people say, “They knew the economy would plummet in 2008.” Before the economic decline, some experts “thought” a reces­sion was coming. Others “thought” the economy would continue to grow.

We “know” after the event. We “think” before the event.

More to come.