<ol><li>The more models you have—the bigger your toolbox—the more likely you are to have the right models to see reality. It turns out that when it comes to improving your ability to make decisions variety matters.</li><li>By default, a typical Engineer will think in systems. A psychologist will think in terms of incentives. A biologist will think in terms of evolution. If we’re only looking at the problem one way, we’ve got a blind spot. And blind spots can kill you.</li><li>Charlie Munger summed up mental models “Well, the first rule is that you can’t really know anything if you just remember isolated facts.”</li></ol>

Learning To Think Better

<ol><li>The map of reality is not reality. Even the best maps are imperfect. That’s because they are reductions of what they represent. If a map were to represent the territory with perfect fidelity, it would no longer be a reduction and thus would no longer be useful to us. A map can also be a snapshot of a point in time, representing something that no longer exists.</li><li>When ego and not competence drives what we undertake, we have blind spots. If you know what you understand, you know where you have an edge over others. </li><li>First-principles thinking is one of the best ways to reverse-engineer difficult times</li></ol>

Core Mental Models 

<ol><li>Thought experiments are powerful because they help us learn from our mistakes and avoid future ones. They let us take on the impossible, evaluate the potential consequences of our actions, and re-examine history to make better decisions. </li><li>Second-order thinking is thinking farther ahead and thinking holistically. It requires us to not only consider our actions and their immediate consequences, but the subsequent effects of those actions as well. </li><li>Probabilistic thinking is essentially trying to estimate, using some tools of math and logic, the likelihood of any specific outcome. </li></ol>

Core Mental Models- Continued

<ol><li>Occam’s Razor, a classic principle of logic and problem-solving. Instead of wasting your time trying to disprove complex scenarios, you can make decisions more confidently by basing them on the explanation that has the fewest moving parts.</li><li>Hanlon’s Razor states that we should not attribute to malice that which is more easily explained by stupidity. In a complex world, using this model helps us avoid paranoia and ideology.</li></ol>

More Core Mental Models

The smartest people in the world use mental models to make intelligent decisions, avoid stupidity, and increase productivity. Let's take a look at how ...

Understand yourself and those around you.

psychology

Psychology

personaldevelopment

Personal Development

problemsolving

Problem Solving

scienceandnature

Science & Nature

Mental Models: The Best Way to Make Intelligent Decisions (~100 Models Explained) - Farnam Street

There are six sociosexual hierarchy ranks ranging from alpha to omega. One of them is Sigma. You may not hear as much about a sigma male as you do about alpha and beta males. But what is it about them that is underappreciated while also being extremely attractive?

11 Personality Traits Of A Sigma Male That Sets Them Apart

A Sigma male is someone who isn't interested in either being a leader or a follower. He is not the loud or aggressive person who tries to get everyone's attention in the room, nor is he the shy and introverted person who pretends not to exist in the room.

So, who exactly is a Sigma male?

<ol><li>He likes to fly solo and is very independent.</li><li>He has a mysterious personality.</li><li>He likes silence.</li><li>He lives life on the edge.</li><li>He is extremely smart.</li><li>He has a rebellious spirit.</li><li>He is never short of attention.</li><li>He has an abstract way of thinking.</li><li>He has his distinctive style.</li><li>He is a deep thinker.</li><li>He can adapt to anything.</li></ol>

Here Are 11 Characteristics of a Sigma Male That Sets Them Apart

Being with a Sigma male can be an extremely rewarding and enriching experience because it will completely broaden your horizons and cause you to see the world in a new light. To be honest, Sigma males are extremely rare and can be difficult to understand, but if you come across one, make a mental note of it.

A sigma male is a free spirit who dances to the drum of his own beat and is extremely self-aware and comfortable in his own skin.

communication

Communication

The virtual world can seem more immediate and significant than the smelly, tasty, touchy 3D Real World. Its a place of anxiety and triumphant exhilaration which sweeps us into the social networking swirl of collective consciousness.It is a parallel world where you can be on the move in the Real World, yet always hooked into an alternative time and place.Many parents complain that they are unable to take their child away from screen time and back into the 3D world.

A Global Phenomenon

Sharing personal information about oneself, as promoted on social networking sites, activates the reward systems in the brain the same way as food and sex do.

Upon waking, you will be checking your phone within 15 minutes of consciousness.You will need stimulation, excitement and escapism. So you use technology to socialise, for online shopping, playing games etc.The Real physical world is becoming less relevant as traditional constraints of time and space fade.The time that could have been spent walking in fresh air or having a face to face conversation has been forfeited in favour of cyberactivity, which is a completely new type of environment where taste, smell and touch are not stimulated, being completely sedentary for long periods of time.

Unprecedented Times

We have always invented new things, we have always worried about new things and we have always moaned about the younger generations.

In 2000, brain scans showed that London cab drivers had developed physical changes in their brains as a result of their daily activity of constantly using their working memory. Their hippocampus was actually bigger compared to non taxi drivers of the same age. This is an example of the 'use it or lose it' principle.Plasticity is the term for this process, the brains ability to shape and mould itself in response to stimuli.Environmental enrichment has been demonstrated in studies showing physical changes in neural circuits through experience.

How The Brain Changes

The brain undergoes continuous physical change... the brain remakes itself throughout life, in response to outside stimuli to its environment and to experience.

The word 'ecstasy' in Greek means 'to stand outside' of oneself. It is this emotional, unreflective state that we seek out through a diverse range of pursuits - an absence of self consciousness, of being 'abandoned'.MINDLESS - sensation, strong feelings dominate, here and now, driven by external environment, little meaning, not self conscious, high dopamine, meaningless world.MINDFUL - cognition, thinking dominates, past-present-future, driven by internal perceptions, personalised meaning, robust sense of self, less dopamine, meaningful world.

Out Of Your Mind

Thinking is movement confined to the brain.

When you share personal information on a social networking site, you share it with a large immediate audience.Research shows that the lack of face to face communication leads to a corresponding rise in self disclosure. The absence of visual cues or body language to discourage us or make us second guess what we may disclose, has lead to a rise in self disclosure.Body language is an ancient evolutionary mechanism for not letting our defences down prematurely.

Social Networking

We decided that these would be the social norms now and we just went for it.

Sometimes the real world is not the best place to be. Video games can provide a calming routine for people who are unable to cope with the uncertainties of the real world.Unlike traditional real world games, video games offer an escape from the dull, difficult world to one that is more exciting, appealing to the senses and where there are reassuringly definite and predictable outcomes in which the player can participate as a better self.Research shows unhappy people create avatars that are very different to themselves whereas happy people create avatars just like themselves.

Video Games

Without Google and Wikipedia, I am stupid, not just ignorant.

Research analysing reading behaviour in the digital environment has revealed that decreases in sustained attention are increasingly characterising peoples literacy skills. People inclined to browse, scan and read more selectively, will spend less time on in depth and concentrated reading.Paper books are of a fixed time and place, have permanence and therefore a reassuring security which an ebook will never deliver.Search engines offer an easy fast option as opposed to taking your brain for a work out, you will now run the risk of becoming mentally flabby. The display will be driving you.

The Display Is Driving You

Books stand for knowledge, new ideas and the inventiveness of the human spirit and imagination.

Social networking sites could worsen communication skills and reduce interpersonal empathy.Personal identities might be constructed externally and refined to perfection with the praise of an audience as a priority, an approach more suggestive of performance art than of personal growth.Obsessive gaming could lead to greater recklessness, a shorter attention span and an increasingly aggressive disposition.Heavy reliance on search engines and a preference for surfing, rather than researching, could result in quick mental processing at the expense of deep knowledge and understanding.

Summary

Firstly, the human brain adapts to the environment; secondly, the environment is changing in an unprecedented way; so thirdly, the brain may also be changing in an unprecedented way.

How digital technologies are leaving their mark on our brains.

We live in a world unimaginable only decades ago: a domain of backlit screens, instant information, and vibrant experiences that can outcompete dreary reality. Our brave new technologies offer incredible opportunities for work and play. But at what price? Now renowned neuroscientist Susan Greenfield—known in the United Kingdom for challenging entrenched conventional views—brings together a range of scientific studies, news events, and cultural criticism to create an incisive snapshot of “the global now.” Disputing the assumption that our technologies are harmless tools, Greenfield explores whether incessant exposure to social media sites, search engines, and videogames is capable of rewiring our brains, and whether the minds of people born before and after the advent of the Internet differ. Stressing the impact on Digital Natives—those who’ve never known a world without the Internet—Greenfield exposes how neuronal networking may be affected by unprecedented bombardments of audiovisual stimuli, how gaming can shape a chemical landscape in the brain similar to that in gambling addicts, how surfing the Net risks placing a premium on information rather than on deep knowledge and understanding, and how excessive use of social networking sites limits the maturation of empathy and identity. But Mind Change also delves into the potential benefits of our digital lifestyle. Sifting through the cocktail of not only threat but opportunity these technologies afford, Greenfield explores how gaming enhances vision and motor control, how touch tablets aid students with developmental disabilities, and how political “clicktivism” foments positive change. In a world where adults spend ten hours a day online, and where tablets are the common means by which children learn and play, Mind Change reveals as never before the complex physiological, social, and cultural ramifications of living in the digital age. A book that will be to the Internet what An Inconvenient Truth was to global warming, Mind Change is provocative, alarming, and a call to action to ensure a future in which technology fosters—not frustrates—deep thinking, creativity, and true fulfillment. Praise for Mind Change “Greenfield’s application of the mismatch between human and machine to the brain introduces an important variation on this pervasive view of technology. . . . She has a rare talent for explaining science in accessible prose.”—The Washington Post “Greenfield’s focus is on bringing to light the implications of Internet-induced ‘mind change’—as comparably multifaceted as the issue of climate change, she argues, and just as important.”—Chicago Tribune “Mind Change is exceedingly well organized and hits the right balance between academic and provocative.”—Booklist “[A] challenging, stimulating perspective from an informed neuroscientist on a complex, fast-moving, hugely consequential field.”—Kirkus Reviews “[Greenfield] is not just an engaging communicator but a thoughtful, responsible scientist, and the arguments she makes are well-supported and persuasive.”—Mail on Sunday “Greenfield’s admirable goal to prove an empirical basis for discussion is . . . an important one.”—Financial Times “An important presentation of an uncomfortable minority position.”—Jaron Lanier, Nature

parenting

Parenting

technologyandthefuture

Technology & The Future

books

Books

We live in a world unimaginable only decades ago: a domain of backlit screens, instant information, and vibrant experiences that can outcompete dreary reality. Our brave new technologies offer incredible opportunities for work and play. But at what price?   Now renowned neuroscientist Susan Greenfield—known in the United Kingdom for challenging entrenched conventional views—brings together a range of scientific studies, news events, and cultural criticism to create an incisive snapshot of “the global now.” Disputing the assumption that our technologies are harmless tools, Greenfield explores whether incessant exposure to social media sites, search engines, and videogames is capable of rewiring our brains, and whether the minds of people born before and after the advent of the Internet differ.   Stressing the impact on Digital Natives—those who’ve never known a world without the Internet—Greenfield exposes how neuronal networking may be affected by unprecedented bombardments of audiovisual stimuli, how gaming can shape a chemical landscape in the brain similar to that in gambling addicts, how surfing the Net risks placing a premium on information rather than on deep knowledge and understanding, and how excessive use of social networking sites limits the maturation of empathy and identity.   But Mind Change also delves into the potential benefits of our digital lifestyle. Sifting through the cocktail of not only threat but opportunity these technologies afford, Greenfield explores how gaming enhances vision and motor control, how touch tablets aid students with developmental disabilities, and how political “clicktivism” foments positive change.   In a world where adults spend ten hours a day online, and where tablets are the common means by which children learn and play, Mind Change reveals as never before the complex physiological, social, and cultural ramifications of living in the digital age. A book that will be to the Internet what An Inconvenient Truth was to global warming, Mind Change is provocative, alarming, and a call to action to ensure a future in which technology fosters—not frustrates—deep thinking, creativity, and true fulfillment. Praise for Mind Change   “Greenfield’s application of the mismatch between human and machine to the brain introduces an important variation on this pervasive view of technology. . . . She has a rare talent for explaining science in accessible prose.”—The Washington Post   “Greenfield’s focus is on bringing to light the implications of Internet-induced ‘mind change’—as comparably multifaceted as the issue of climate change, she argues, and just as important.”—Chicago Tribune   “Mind Change is exceedingly well organized and hits the right balance between academic and provocative.”—Booklist   “[A] challenging, stimulating perspective from an informed neuroscientist on a complex, fast-moving, hugely consequential field.”—Kirkus Reviews   “[Greenfield] is not just an engaging communicator but a thoughtful, responsible scientist, and the arguments she makes are well-supported and persuasive.”—Mail on Sunday   “Greenfield’s admirable goal to prove an empirical basis for discussion is . . . an important one.”—Financial Times   “An important presentation of an uncomfortable minority position.”—Jaron Lanier, Nature

Susan Greenfield

Mind Change

Being in nature can improve your mood. Just take a walk, or go for a bike ride, lay on the beach or in the park and notice little details that nature has. The sound of a bird, the texture of a leaf, the freshness of the air - notice these things and be grateful for the experience.

Appreciating Nature

Breathing deeply in through the nose, into the belly and slowly out through the mouth is a very convenient and powerful tool for relaxing your mind and body. Doing this whenever I feel stressed really helps me.

Deep Belly Breathing

Notice emotions, thoughts, and other sensations (sounds, smells, temperature,... ) without judging them or pushing them away. Try to sense where and how you feel the emotions in your body.

Mindfulness

Take a look at the boundaries in your life. You don't always have to do things for other people. Prioritize your own health, time and needs. Saying 'no' is often the healthy response when you know that what is requested or expected of you would stress you out or drain your energy.

Establishing Boundaries

Be spontaneous and do things just for fun not because of what you gain by doing that or because something is the rational thing to do. Try to sense what you really feel like doing in that moment and just do it.

Be like a child 

A healthy body allows the mind to be healthy. Exercise, eat nutritous foods and get enough sleep.

Treat your body well

Trauma often seems as this extreme experience that only people have to deal with that went through horrible events. However, there are more and less severe traumatic experiences. While it can be hard to acknowledge your own trauma it can be really helpful to understand why you mind is the way it is. It is important not to judge and rather witness the emotions that come up.

Understand your own trauma

Fear is supposed to prevent you from getting hurt but sometimes fear is irrational and not helpful. When you understand what you are afraid of and why your are afraid of it the fear is not needed anymore. This gives your mind the opportunity to heal.

Understand your fears

This book helped me understand my own emotions and helped me improve my mental and physical wellbeing. Here are some of the ideas that I found particularly important.

#1 NEW YORK TIMES BESTSELLER · INSTANT INTERNATIONAL BESTSELLER From Dr. Nicole LePera, creator of "the holistic psychologist"—the online phenomenon with more than two million Instagram followers—comes a revolutionary approach to healing that harnesses the power of the self to produce lasting change. As a clinical psychologist, Dr. Nicole LePera often found herself frustrated by the limitations of traditional psychotherapy. Wanting more for her patients—and for herself—she began a journey to develop a united philosophy of mental, physical and spiritual wellness that equips people with the interdisciplinary tools necessary to heal themselves. After experiencing the life-changing results herself, she began to share what she’d learned with others—and soon “The Holistic Psychologist” was born. Now, Dr. LePera is ready to share her much-requested protocol with the world. In How to Do the Work, she offers both a manifesto for SelfHealing as well as an essential guide to creating a more vibrant, authentic, and joyful life. Drawing on the latest research from a diversity of scientific fields and healing modalities, Dr. LePera helps us recognize how adverse experiences and trauma in childhood live with us, resulting in whole body dysfunction—activating harmful stress responses that keep us stuck engaging in patterns of codependency, emotional immaturity, and trauma bonds. Unless addressed, these self-sabotaging behaviors can quickly become cyclical, leaving people feeling unhappy, unfulfilled, and unwell. In How to Do the Work, Dr. LePera offers readers the support and tools that will allow them to break free from destructive behaviors to reclaim and recreate their lives. Nothing short of a paradigm shift, this is a celebration of empowerment that will forever change the way we approach mental wellness and self-care.

mindfulness

health

Health

#1 NEW YORK TIMES BESTSELLER ·  INSTANT INTERNATIONAL BESTSELLER From Dr. Nicole LePera, creator of "the holistic psychologist"—the online phenomenon with more than two million Instagram followers—comes a revolutionary approach to healing that harnesses the power of the self to produce lasting change. As a clinical psychologist, Dr. Nicole LePera often found herself frustrated by the limitations of traditional psychotherapy. Wanting more for her patients—and for herself—she began a journey to develop a united philosophy of mental, physical and spiritual wellness that equips people with the interdisciplinary tools necessary to heal themselves. After experiencing the life-changing results herself, she began to share what she’d learned with others—and soon “The Holistic Psychologist” was born.Now, Dr. LePera is ready to share her much-requested protocol with the world. In How to Do the Work, she offers both a manifesto for SelfHealing as well as an essential guide to creating a more vibrant, authentic, and joyful life. Drawing on the latest research from a diversity of scientific fields and healing modalities, Dr. LePera helps us recognize how adverse experiences and trauma in childhood live with us, resulting in whole body dysfunction—activating harmful stress responses that keep us stuck engaging in patterns of codependency, emotional immaturity, and trauma bonds. Unless addressed, these self-sabotaging behaviors can quickly become cyclical, leaving people feeling unhappy, unfulfilled, and unwell. In How to Do the Work, Dr. LePera offers readers the support and tools that will allow them to break free from destructive behaviors to reclaim and recreate their lives. Nothing short of a paradigm shift, this is a celebration of empowerment that will forever change the way we approach mental wellness and self-care.

Dr. Nicole LePera is an accomplished writer whose work has resonated with readers around the world. Dr. Nicole LePera has published several books that explore a range of topics, from fiction to nonfiction, and has received critical acclaim for the ability to weave compelling narratives. Dr. Nicole LePera's writing style is known for its depth and authenticity, and has earned quite a loyal following of readers.

Dr. Nicole LePera

How to Do the Work

If you spend any time around people, you’ll quickly see that while we tend to attribute our own problems to outside events, we’re happy to blame other people for similar issues.This attribution bias, or fundamental attribution error, causes us to over-emphasize internal motivations to explain someone’s behaviour while under-emphasizing the situation factors.We assume that someone’s actions tell us what “kind” of person they are, as opposed to considering the environmental factors that may have influenced their behaviour.

Attribution Error

Most of us are prone to attribution error as it’s a mental shortcut that keeps us from having to think too hard. It’s much simpler to blame someone’s personality than take into account all of the situational factors that may be affecting them.We also like predictability in dealing with other people. We want to know who we can trust and who we can’t. Internal traits are relatively stable. External events are changing all the time. Attributing someone’s behavior to their personality lets us categorize that person for future events.

The Easy Mental Shortcut

One of the first lessons a new manager learns is that people rarely do what you ask them to do. The second lesson is that the fault almost always lies with the manager. Ninety percent of poor behaviours tend to be a result of miscommunication.Managers, especially newer managers, struggle to set clear expectations. They’re unpracticed in giving clear, actionable feedback. And they rarely give their team definitive priorities.

People Often Fail, But Not Because They’re Failures

New managers can go through a quick checklist and look at four potential causes whenever someone fails to live up to their expectations:<ul><li>Direction — Did I clearly communicate my expectations?</li><li>Competence — Did this person have the skill necessary to succeed?</li><li>Opportunity — Did they have the time and resources necessary to succeed?</li><li>Motivation — Were they motivated to do it?</li></ul>

The Checklist For The New Manager

Hanlan’s Razor states, “Never attribute to malice that which is adequately explained by stupidity.” It’s a good maxim to remember when we start thinking someone’s a jerk for making our lives difficult. But it’s just as important to remember that simply because someone does something stupid, doesn’t mean that they are stupid.Most workplaces are no stranger to incompetence. Yet they don’t hire incompetent people. And they don’t train people to be incompetent. Nevertheless, you don’t need to look hard to find examples of dumb choices and ill-advised actions.

The Reason For Office Incompetence

<ul><li>Have compassion for everyone you meet.</li><li>Put yourself in their shoes. Think of a time that you were in a similar situation and recognize how external factors influenced your own behaviours.</li><li>Instead of assuming, simply have a conversation and understand what’s really driving people’s behaviour.</li></ul>

Overcome Your Attribution Bias Today

If I don’t respond to someone’s email, it’s because I’m busy. Or maybe I got tied up doing more important things. Either way, I had the best of intentions, it’s just that something else got in the…

leadershipandmanagement

Leadership & Management

Leadership Biases: Stop Letting Attribution Error Hold You Back

Research shows that people are more cautious to speak up at work than they were a few years ago. 
In a survey, nine out of ten respondents felt emotionally or physically unsafe to speak out. Topics people dreaded addressing were political or social issues (74%), and pandemic issues (70%).

Feeling unsafe to speak out

When we address issues that are emotionally and politically risky, we tend to see the other person more negatively. We tell ourselves stories that show us as virtuous victims and the other party as the villain. We then form emotions of disgust and fear that give rise to conflict and lead to a downward spiral that reinforces our story. A study found that subjects who tended to tell more extreme stories about their colleagues were more than three times more likely to feel fearful and 3.5 times more likely to lack the confidence to speak their minds with peers.

We dread speaking up because of the stories we tell ourselves

<ul><li>Make it safe. When emotions escalate, reassure others of your respect for them.</li><li>Get curious. Rather than trying to decide who is right, aim to understand the other person's view. Ask questions and try to understand.</li><li>Start with facts behind your point of view, not judgments or opinions.</li><li>Don't focus on convincing. Your main goal should not be to change the other person's mind but to encourage sharing ideas.</li><li>Be confident in your opinion but humble enough to accept that you don't have all the answers and that new information might change your view.</li></ul>

How to have a conversation around tough topics

Research-backed tactics to lower the temperature when talking about hot-button topics.

How to Respectfully Discuss Contentious Issues at Work

The answer it depends on a number of factors, including the age of the child, the likelihood they will hear it from another source, and what your family’s relationship to the conflict is.If for any reason you think your child is going to hear about this, then get to them and talk to them.If that’s not that case, you should only talk to your child, if under the age of eight, if it’s going to impact your family, if your family will really feel it.

Should I talk to my children about war?

<ul><li>A useful place to start is by asking whether your child has heard about the conflict, and if so, what they have heard.</li><li>It is important to first “process your own feelings as parent and then figure out if you should talk to your child about it.</li><li>By entering the conversation with a question, it also allows parents to listen to their child’s emotional response, and correct any misconceptions with facts.</li><li>Before correcting any misinformation, parents should ask a child how they are feeling about the information they have learned</li></ul>

How to talk to your child about war

<ul><li>According to Dr Gilboa, these messages may be something like: “Our family is safe,” “oppression is wrong,” or “<a href="https://www.independent.co.uk/topic/war">war</a> is bad”.</li><li>If the child is older, it may mean they are “ready for a more nuanced convo about conflict, such as where is the gain?” which can help them grow into critical thinkers.</li><li>While it is important that parents broach difficult topics such as war with their children, Dr Gilboa made a point to remind parents that this cannot be successfully done until they have processed their own feelings about the news.</li></ul>

The main messages

<ul><li>While social media can be a useful source of news, it can also be flooded with misinformation.</li><li>In the age of social media, parents should also be aware that their children may be exposed to information about the topic on platforms such as Twitter, TikTok or Instagram. </li><li>If your child comes to you with a piece of information that you don’t believe is accurate, rather than immediately dismissing the news, Dr Gilboa recommends asking what their source is, and then cross-referencing the information with more credible news outlets to see whether it is accurate.</li></ul>

Social Media vs accurate sources

In times of uncertainty or fear, it can be especially daunting deciding whether a child should be exposed to a topic that is frightening.

How and when to talk to children about war, according to a parenting expert

"Thinking, Fast and Slow" is an extensive introduction to the biases and inner mechanisms of the human brain.
While primarily a behavioral economics book, you will also find out about your limitations, how to more efficiently convince people, and understand why people make certain decisions despite feeling they are irrational.
All the conclusions are validated through experiments that Kahneman performed along the years.

How Humans Think

The human brain is controlled by two separate systems:
<ul>
<li>System 1 - Very fast, it works on intuition and evolves as we encounter common situations;</li>
<li>System 2 - Slower. We tend to avoid using it too much, but it is mandatory for complex problems that can't be answered by System 1, such as math problems.</li>
</ul>
You are not aware of which system is controlling the brain unless you make a conscious effort.
The following few ideas rely on this dual system distinction.

Two Systems

An answer to a number question can be influenced by previous information (even if it is completely unrelated to it). Using this strategy to influence decisions is called priming.
It acts as an anchoring effect, the human starts from the real answer he/she would give and goes up/down towards the number that was proposed (accidentally or not). This anchoring can be more or less strong (e.g. when the actual answer is 10, the suggested one is 5, and the person answers 8, it had a 20% impact).

Priming and Anchoring

<ul>
<li>Asking somebody whether he thinks an environment tax of 20% is too high or too low. If it is higher than what he/she had in mind, the answer will still be lower, but closer to 20% than it would have been before. Same for when it is higher.</li>
<li>Telling a judge how many years ago you came to the US can influence the length of the next prison sentence he gives. This is completely unrelated, but it is a number that the judge has in mind and can start from.</li>
</ul>

Examples of Priming

People tend to like or dislike everything about a person, thing, event or idea because it is easier for System 1 to work like that. Careful analysis of good and bad sides is much more mentally taxing.

Halo Effect

When answering a question, the brain tends to only focus on the available information, disregarding the one missing.For example: if you are told somebody is intelligent and strong you automatically think they are a good leader.This leads people to jump to conclusions.

All You See Is All There Is (AYSIATI)

People can associate intensity across subjects that are completely unrelated.For example: if crimes could be represented in colors, then murder would be a deeper shade than robbery.

Intensity Matching

The brain by default prefers using System 1 to answer questions. When the actual question can't be answered this way, it aims to answer a proxy question that can be.For example: When faced with the question "How much would you donate for a humanitarian cause?", the brain automatically turns it to "How much do I actually care about that cause?" and "How much money am I willing to lose donating?"

Proxy Questions

Experiments with a low sample (N) are much more likely to have extreme results than ones with a high N. Conversely, experimenting with large samples is more precise than with small samples.This can make us have a skewed view of reality by jumping to conclusions where evidence is not sufficient.

The Law of Small Numbers

Due to the halo effect and the fact that System 1 deals in averages, not sums, people tend to view things that have higher overall quality as better than ones with lower overall quality, even though the latter may be, in fact, strictly better.For example: 16 perfect-condition pieces of cutlery and 8 broken ones will be valued less than only the 16 perfect pieces, if viewed separately.

Less Is More

People change their opinion about something based on the ease that they retrieve arguments and examples for it.For example: you will think a course you're attending is better if you are asked to find 10 improvements rather than 5, because you will have a harder time finding them all.This applies in the case of news on very rare events that are suddenly an issue (e.g. terrorism, plane crashes). This leads to "Availability Cascades" where the people's emotions turn to irrational fear over insignificant risks.

Availability Bias

Success or failure are typically outliers due to luck and people/things regress to their usual performance (the mean, or the prior).For example: in a sports competition, an athlete that does much better than the rest on the first day will most likely perform worse on the following ones, because he attained the initial performance in part due to chance.Intuitively, this is how success is defined:<ul><li>success = talent + luck</li><li>great success = a little more talent + a lot of luck</li></ul>

Regression to the Mean

An easy way of making predictions by taking into account uncertainty and the natures of the 2 systems:<ul><li>Start with an estimate of the average answer;</li><li>Determine your estimate (performed by System 1);</li><li>Estimate the correlation between your evidence and the target (performed by System 2);</li><li>Use the correlation to move that many percents from the average to the estimate.</li></ul>For example: to estimate your GPA, start from the average GPA and set your expected GPA. Estimate how confident you are in your prediction. The predicted GPA will be closer to your expectation if your confidence is higher.

Intuitive Predictions

Not all domains are equal in nature. Some are more reliant on skill (e.g. surgery), while others are on luck (e.g. stock trading). People can be tricked into thinking that their success is actually based on skill despite the nature of their activity.

Skill Illusion

Experimentally speaking, intuition is less likely to come to a better conclusion than simple formulas, that are not influenced by human nature.For example: you will find more success in hiring candidates if you use a pre-determined checklist instead of relying on your interviewer sense.The importance of intuition increases based on the domain and its dependence on skill.

Intuitions vs. Formulas

When it comes to decision-making, there is a distinction between two idealized "species" of people:<ul><li>Humans - Beings with flaws and feelings, susceptible to each of the biases presented here</li><li>Econs - Beings that are always able to think rationally, unaffected by the biases presented here</li></ul>The "econ" term is the short form for "economist", as people that analyze and invest in the financial markets make every decision consciously, with a clear goal in mind.

Two Species

The degree of "utility" as perceived by people decreases gradually. $1,000 is perceived wildly different for somebody with a net worth of $10,000 vs. $1,000,000. Similarly, an increase from $1,000 to $2,000 is perceived as much better than one from $10,000 to $11,000 despite the equal increase.This is the utility theory developed by the mathematician Daniel Bernoulli.This theory is not ideal and cannot model every case. It fails in certain cases, which is why prospect theory was developed.

Utility Theory

Prospect theory is an improved version of the previous utility theory.Utility is instead based on differences from the reference point.Humans have, by default, some degree of loss aversion, so the absolute utility of a loss will be perceived as greater than one of an equal gain. A survey found that people would refuse a bet where they would gain $100 with a 50% chance and lose $100 otherwise. In fact, they would not accept until the gain is at least twice as big, depending on their degree of loss aversion.

Prospect Theory

Thus, there are 3 cognitive features in prospect theory:<ul><li>Evaluation based on a reference point</li><li>Diminishing sensitivity (borrowed from Bernoulli)</li><li>Loss aversion</li></ul>The theory does not take into account human feelings of disappointment when failing to win gambles.

Prospect Theory Summary

People become more unwilling to let go of the things or benefits they already own. They will only sell them for more than they would be willing to buy them for, even if some time ago they were indifferent to them. In short, they grow attached.

The Endowment Effect

Depending on the situation, people can be either risk averse or risk seeking. It is all about the probability of events happening and whether the end result will be positive or negative. For instance, when the chances are very much in favor and the result is positive, people are risk averse and fear the disappointment that luck won't be on their side, so they do anything to maximize their chances to 100%.The change from 0% to 1% chance (possibility) and from 99% to 100% chance (certainty) are important psychological thresholds.

The Fourfold Pattern

People tend to overestimate the probability of rare events and then overweight them in their decisions.An event is more likely to be preferred if its image is more vivid (e.g. receiving $100 in a blue envelope as opposed to only receiving $100).

Rare events

People (through System 1) are more sensitive to formulations like "12 out of 1,000" and will sometimes think it's more likely than a risk of 2%. Why? The image is more vivid and it is easier for System 1 to think in terms of individual cases as opposed to percentages.Additionally, people (again, System 1) will tend to be more sensitive to higher values of the denominator while disregarding the numerator: 100 out of 10,000 may be perceived as worse (or better, depending on the context) than 12 out of 1,000. This is called Denominator Neglect.

Statistics Put Nicely

When faced with a gamble or chance event, before declining it because of other biases (e.g. loss aversion), think not about the single instance where you win or lose, but rather about your whole life as a series of such gambles and whether the total number will lead to consistent gains. Think like a trader! This is called Broad Framing.

Risk Policies

Acting differently from the default option has the downside of bringing regret if the decision turned out to be wrong and defaulting was the best course of action.Example: you will feel better if you are injured at the convenience store you always go to, as opposed to getting injured at a new convenience store because the other one is doing renovations.

Regret

You can reach more sensible decisions when you have a broader context.In real life, judges are asked not to consult more than the case given to them and, thus, lack the broader context, leading to worse decisions regarding penalties.

Context Matters

Given all the previous information, you can guide people to a decision based on the framing of the problem.Take loss aversion into account - try to disguise the decision as a win (or loss if you prefer them not to take it).Think about the reference point and exercise thought of different ones (e.g. imagine you did not own X).

Focus On Framing

Think about the different mental accounts that are not, in fact, separate (e.g. gains on stocks vs. crypto) and imagine they were merged.Make the default option the one you want and the differences will be huge. For instance, in the case of governmental systems, the percentage of the population that donates organs on death is largely dependent on whether the citizen needs to submit a request to donate or to not donate on death. In 2003 this percentage was close to 100% for Austria and 12% for Germany. The difference lies in what the default option was.

Finally, along with the two systems and the two species, humans also have two selves:<ul><li>Experiencing Self - the self that experiences things in the moment;</li><li>Remembering Self - the self that remembers experiences, remembers them, assigns a rating, and likes creating stories.</li></ul>

Two Selves

The remembering self leverages System 1 and, when it comes to experiences, it cares about:<ul><li>The peak intensity (be it negative or positive);</li><li>The way they end;</li><li>To some extent, the average experience but not the duration, because System 1 deals with averages, not sums. This is called Duration Neglect.</li></ul>

Remembering Self

People can be determined to consider a strictly worse experience as better than another based on the impression of the remembering self.Example: in an experiment, people had their hands in very cold water for 60 seconds, then in cold water for 60 seconds and 30 seconds in slightly warmer water. When asked which experience they would rather repeat, most people chose the second option despite it being strictly worse.

Illusion of the Memory

The previous result makes sense because people tend to answer harder questions like "Which would you rather repeat?" with easier questions like "Which did you like more?"This way they can be convinced to repeat a worse experience just because it ended slightly better or had a lower peak intensity even though it took much longer. This is also why people would rather go through a long and painful surgery than an extremely painful surgery that takes a few seconds.

The neglect of experiencing self and the appeal of remembering self (even though both selves constitute us) leads people to like stories more than anything else.This is why we tend to ignore details that do not fit our view of the story, whatever it is: relationship, career, trips, etc.

Story Appeal

Predicting the future from current circumstances, heavily influenced by emotion (e.g. how your marriage will go based on your wedding day) is not ideal.

Affective Forecasting

Because of AYSIATI, people will attribute larger weight to things they are thinking about the moment.

Focusing Illusion

Nothing in life is as important as you think it is when you are thinking about it

People will regress to the mean and the happiness they experience will always turn back to an average value. For most of us, this average value is 7 on a scale from 1 to 10.

Daily Happiness

Lessons in Decision-Making from Nobel Laureate Daniel Kahneman

The Art of Decision-Making

Major New York Times bestseller Winner of the National Academy of Sciences Best Book Award in 2012 Selected by the New York Times Book Review as one of the ten best books of 2011 A Globe and Mail Best Books of the Year 2011 Title One of The Economist's 2011 Books of the Year One of The Wall Street Journal's Best Nonfiction Books of the Year 2011 2013 Presidential Medal of Freedom Recipient Kahneman's work with Amos Tversky is the subject of Michael Lewis's The Undoing Project: A Friendship That Changed Our Minds In the international bestseller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, 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. The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation—each of these can be understood only by knowing how the two systems 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. Winner of the National Academy of Sciences Best Book Award and the Los Angeles Times Book Prize and selected by The New York Times Book Review as one of the ten best books of 2011, Thinking, Fast and Slow is destined to be a classic.

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Economics

Major New York Times bestseller Winner of the National Academy of Sciences Best Book Award in 2012 Selected by the New York Times Book Review as one of the ten best books of 2011 A Globe and Mail Best Books of the Year 2011 Title One of The Economist's 2011 Books of the Year One of The Wall Street Journal's Best Nonfiction Books of the Year 2011 2013 Presidential Medal of Freedom Recipient Kahneman's work with Amos Tversky is the subject of Michael Lewis's The Undoing Project: A Friendship That Changed Our Minds In his mega bestseller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, 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. The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation—each of these can be understood only by knowing how the two systems 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. Winner of the National Academy of Sciences Best Book Award and the Los Angeles Times Book Prize and selected by The New York Times Book Review as one of the ten best books of 2011, Thinking, Fast and Slow is destined to be a classic.

Thinking, Fast and Slow

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