Thinking, Fast and Slow - Daniel Kahneman

Recommendations

Info

and the failure to acknowledge them is as obvious a flow as the counterexamples that I invoked to criticize Bernoulli’s theory. Prospect theory and utility theory also fail to allow for regret. The two theories share the assumption that available options in a choice are evaluated separately and independently, and that the option with the highest value is selected. This assumption is certainly wrong, as the following example shows. Problem 6: Choose between 90% chance to win $1 million OR $50 with certainty. Problem 7: Choose between 90% chance to win $1 million OR $150,000 with certainty. Compare the anticipated pain of choosing the gamble and not winning in the two cases. Failing to win is a disappointment in both, but the potential pain is compounded in problem 7 by knowing that if you choose the gamble and lose you will regret the “greedy” decision you made by spurning a sure gift of $150,000. In regret, the experience of an outcome depends on an option you could have adopted but did not. Several economists and psychologists have proposed models of decision making that are based on the emotions of regret and disappointment. It is fair to say that these models have had less influence than prospect theory, and the reason is instructive. The emotions of regret and disappointment are real, and decision makers surely anticipate these emotions when making their choices. The problem is that regret theories make few striking predictions that would distinguish them from prospect theory, which has the advantage of being simpler. The complexity of prospect theory was more acceptable in the competition with expected utility theory because it did predict observations that expected utility theory could not explain. Richer and more realistic assumptions do not suffice to make a theory successful. Scientists use theories as a bag of working tools, and they will not take on the burden of a heavier bag unless the new tools are very useful. Prospect theory was accepted by many scholars not because it is “true” but because the concepts that it added to utility theory, notably the reference point and loss aversion, were worth the trouble; they yielded new predictions that turned out to be true. We were lucky. Speaking of Prospect Theory “He suffers from extreme loss aversion, which makes him turn down very favorable opportunities.”
“Considering her vast wealth, her emotional response to trivial gains and losses makes no sense.” “He weighs losses about twice as much as gains, which is normal.” The Endowment Effect You have probably seen figure 11 or a close cousin of it even if you never had a class in economics. The graph displays an individual’s “indifference map” for two goods. Figure 11
Page 1:
A 1 E=mc 2 This eBook is provided b
Page 4 and 5:
Contents Introduction Part I. Two S
Page 6 and 7:
Part V. Two Selves 35. Two Selves 3
Page 8 and 9:
So this is my aim for watercooler c
Page 10 and 11:
participants in our experiments ign
Page 12 and 13:
easy to identify a small change in
Page 14 and 15:
From what we know about the accurac
Page 16 and 17:
agents in classical economics and i
Page 18 and 19:
Psychologists have been intensely i
Page 20 and 21:
Brace for the starter gun in a race
Page 22 and 23:
event is detected that violates the
Page 24 and 25:
attention on a boring book, when we
Page 26 and 27:
You have been invited to think of t
Page 28 and 29:
Start beating a steady rhythm (or b
Page 30 and 31:
main finding was that the ability t
Page 32 and 33:
Another is the prefrontal area of t
Page 34 and 35:
Accelerating beyond my strolling sp
Page 36 and 37:
The list of indications of depletio
Page 38 and 39:
answer have missed an obvious socia
Page 40 and 41:
In one of the most famous experimen
Page 42 and 43:
“Unfortunately, she tends to say
Page 44 and 45:
notion that we have limited access
Page 46 and 47:
Studies of priming effects have yie
Page 48 and 49:
ox changed significantly. The poste
Page 50 and 51:
strain is affected by both the curr
Page 52 and 53:
legs in packages of four. System 2
Page 54 and 55:
message want to stay away from anyt
Page 56 and 57:
kadirga, saricik, biwonjni, nansoma
Page 58 and 59:
These findings add to the growing e
Page 60 and 61:
of circumstances, events, actions,
Page 62 and 63:
understand that I mean a normal tab
Page 64 and 65:
attributions: infants under one yea
Page 66 and 67:
ut the middle items in both display
Page 68 and 69:
Real evidence of generosity is miss
Page 70 and 71:
This procedure makes good use of th
Page 72 and 73:
WY SIATI to help explain a long and
Page 74 and 75:
constantly evaluated as good or bad
Page 76 and 77:
For another example, consider the q
Page 78 and 79:
What level of income in your profes
Page 80 and 81:
“The punishment won’t feel just
Page 82 and 83:
How happy are you with your life th
Page 84 and 85:
Figure 9 As printed on the page, is
Page 86 and 87:
The results this time were complete
Page 88 and 89:
“We are using last year’s perfo
Page 90 and 91:
A study of the incidence of kidney
Page 92 and 93:
Large samples are more precise than
Page 94 and 95:
The message about the poll contains
Page 96 and 97:
interviewing of the pilots should s
Page 98 and 99:
“The sample of observations is to
Page 100 and 101:
parent’s demand that it be played
Page 102 and 103:
operation of System 1. Although I d
Page 104 and 105:
Uses and Abuses of Anchors By now y
Page 106 and 107:
“The firm we want to acquire sent
Page 108 and 109:
A dramatic event temporarily increa
Page 110 and 111:
instructed to contract the zygomati
Page 112 and 113:
found it difficult to find eight in
Page 114 and 115:
The most influential studies of ava
Page 116 and 117:
Differences between experts and the
Page 118 and 119:
actual damage to health appear not
Page 120 and 121:
usiness administration computer sci
Page 122 and 123:
You probably ranked computer scienc
Page 124 and 125:
epresentativeness when we judge the
Page 126 and 127:
laziness. Some people ignore base r
Page 128 and 129:
“They keep making the same mistak
Page 130 and 131:
In the language of this book, we ha
Page 132 and 133:
Which alternative is more probable?
Page 134 and 135:
Björn Borg was the dominant tennis
Page 136 and 137:
information was laid out in front o
Page 138 and 139:
85% of the cabs in the city are Gre
Page 140 and 141:
Interest in cycling is widespread i
Page 142 and 143:
not draw from base-rate information
Page 144 and 145:
chosen another surprising psycholog
Page 146 and 147:
officer in the room to turn his bac
Page 148 and 149:
Now let us go against the time arro
Page 150 and 151:
piano playing = age + weekly hours
Page 152 and 153:
Our difficulties with the concept o
Page 154 and 155:
“Perhaps his second interview was
Page 156 and 157:
Intensity matching yields predictio
Page 158 and 159:
their usual mission, which was to e
Page 160 and 161:
A Defense of Extreme Predictions? I
Page 162 and 163:
Perhaps the most valuable contribut
Page 164 and 165:
Overconfidence The Illusion of Unde
Page 166 and 167:
sentence about an intuition that tu
Page 168 and 169:
Although hindsight and the outcome
Page 170 and 171:
The basic message of Built to Last
Page 172 and 173:
someone’s shoulders and jump acro
Page 174 and 175:
In 1984, Amos and I and our friend
Page 176 and 177:
Some years ago I had an unusual opp
Page 178 and 179:
The idea that the future is unpredi
Page 180 and 181:
Short-term trends can be forecast,
Page 182 and 183: unpredictability. We describe them
Page 184 and 185: the values to make them comparable
Page 186 and 187: Even after being informed that the
Page 188 and 189: only task was to elicit relevant fa
Page 190 and 191: Professional controversies bring ou
Page 192 and 193: Klein elaborated this description i
Page 194 and 195: Acquiring expertise in chess is har
Page 196 and 197: Feedback and Practice Some regulari
Page 198 and 199: It is difficult to reconstruct what
Page 200 and 201: within the optimistic consensus of
Page 202 and 203: about an individual case rarely fee
Page 204 and 205: The diagnosis of and the remedy for
Page 206 and 207: Seymour’s statistical summary. If
Page 208 and 209: The evidence suggests that an optim
Page 210 and 211: had failed. A common thread of bold
Page 212 and 213: The consequence of competition negl
Page 214 and 215: one’s self-image. In essence, the
Page 216 and 217: ut I can still recite its first sen
Page 218 and 219: most significant work we ever did,
Page 220 and 221: The expected value of the gamble an
Page 222 and 223: how the sure outcome differs from t
Page 224 and 225: for so long to see the obvious. Sti
Page 226 and 227: problem 4. Obviously, other example
Page 228 and 229: Loss Aversion Many of the options w
Page 230 and 231: Figure 10 shows an abrupt change in
Page 234 and 235: Students learn in introductory econ
Page 236 and 237: Loss aversion implies only that cho
Page 238 and 239: would share a Nobel Prize many year
Page 240 and 241: The fundamental ideas of prospect t
Page 242 and 243: “He is a miser, and treats any do
Page 244 and 245: Some distinctions between good and
Page 246 and 247: Many of the messages that negotiato
Page 248 and 249: wage cut. The replacement worker ha
Page 250 and 251: The Fourfold Pattern Whenever you f
Page 252 and 253: probability leads to inconsistencie
Page 254 and 255: Table 4 You can see that the decisi
Page 256 and 257: Figure 13 The top row in each cel
Page 258 and 259: time to cut one’s losses. This is
Page 260 and 261: “We never let our vacations hang
Page 262 and 263: People overestimate the probabiliti
Page 264 and 265: depend only on probability, not on
Page 266 and 267: The new hypothesis is that there wi
Page 268 and 269: another: “1,000 Americans will di
Page 270 and 271: experiments on choice from experien
Page 272 and 273: combining the two decision problems
Page 274 and 275: You can see in the display that the
Page 276 and 277: detection. As expected, broad frami
Page 278 and 279: dollar, money is a proxy for points
Page 280 and 281: provide a strong incentive: realizi
Page 282 and 283:
Regret is not the same as blame. Ot
Page 284 and 285:
vaccine that is effective only befo
Page 286 and 287:
with long-term consequences. Hindsi
Page 288 and 289:
are absent, and of course WYSIATI.
Page 290 and 291:
“How tall is John?” If John is
Page 292 and 293:
the threat of skin cancer in farmwo
Page 294 and 295:
As we have seen, rationality is gen
Page 296 and 297:
Would you pay $5 to participate in
Page 298 and 299:
thousands of such experiments, and
Page 300 and 301:
If program B is adopted, there is a
Page 302 and 303:
point, and they are not about the r
Page 304 and 305:
large print, but the move is in the
Page 306 and 307:
The term utility has had two distin
Page 308 and 309:
Figure 15 When the procedure was ov
Page 310 and 311:
not have a voice. The remembering s
Page 312 and 313:
Other classic studies showed that e
Page 314 and 315:
we want to know whether they were r
Page 316 and 317:
How would this prospect affect your
Page 318 and 319:
welcome in any of these situations.
Page 320 and 321:
exposure to loud noise, time pressu
Page 322 and 323:
The satiation level beyond which ex
Page 324 and 325:
the exact question they were asked,
Page 326 and 327:
didn’t get it were significantly
Page 328 and 329:
thinks much about. Thoughts of any
Page 330 and 331:
stories and makes choices, and neit
Page 332 and 333:
The mirror image of the same bias m
Page 334 and 335:
explains how a rational agent with
Page 336 and 337:
The example of a regulation about t
Page 338 and 339:
The way to block errors that origin
Page 340 and 341:
For an illustration of judgment by
Page 342 and 343:
The values in parentheses are the n
Page 344 and 345:
The illusion of validity. As we hav
Page 346 and 347:
elementary demonstration of this ef
Page 348 and 349:
imagine than unlikely ones; and tha
Page 350 and 351:
event. The chain-like structure of
Page 352 and 353:
lines or pages. Thus, people do not
Page 354 and 355:
W. Edwards, “Conservatism in Huma
Page 356 and 357:
Daniel Kahneman and Amos Tversky AB
Page 358 and 359:
Figure 1. A Hypothetical Value Func
Page 360 and 361:
If Program B is adopted, there is a
Page 362 and 363:
same cd Cce f pattern of results wa
Page 364 and 365:
In Figure 2, decision weights are l
Page 366 and 367:
attractive if it is described as ef
Page 368 and 369:
making, play a role analogous to th
Page 370 and 371:
disadvantages as losses. Because lo
Page 372 and 373:
The concepts of utility and value a
Page 374 and 375:
McNeil, B., S. Pauker, H. Sox Jr.,
Page 376 and 377:
editor could do as much as Eric did
Page 378 and 379:
Us (New York: Guilford Press, 1999)
Page 380 and 381:
working memory: Baddeley, Working M
Page 382 and 383:
think with your body: Paula M. Nied
Page 384 and 385:
engaged and analytic mode: Adam L.
Page 386 and 387:
descriptions of two people: Solomon
Page 388 and 389:
“Assimilation and Contrast Effect
Page 390 and 391:
self-assessed contributions: Michae
Page 392 and 393:
always weighted more: Jonathan St.
Page 394 and 395:
inequality of income (measured by s
Page 396 and 397:
outsiders, recruiting CEOs from com
Page 398 and 399:
moderated by an arbiter: Mellers, H
Page 400 and 401:
admiration of others: Entrepreneurs
Page 402 and 403:
“history of one’s wealth”: Ot
Page 404 and 405:
half of the tokens will change hand
Page 406 and 407:
“acceptable/unacceptable”: Jos
Page 408 and 409:
Samuel R. Gross and Kent D. Syverud
Page 410 and 411:
“a sinking feeling”: Marcel Zee
Page 412 and 413:
one embarrassing finding: Kuhn famo
Page 414 and 415:
life as a whole these days: Another
Page 416 and 417:
Los Angeles, Graduate School of Edu
Page 418 and 419:
The index that appeared in the prin
Page 420 and 421:
availability; affect and; and aware
Page 422 and 423:
oken-leg rule budget forecasts Buil
Page 424 and 425:
cognitive illusions; confusing expe
Page 426 and 427:
default options denominator neglect
Page 428 and 429:
Epley, Nick Epstein, Seymour equal-
Page 430 and 431:
forecasts, see predictions and fore
Page 432 and 433:
grades and grade point averages (GP
Page 434 and 435:
inheritances injection puzzle In Se
Page 436 and 437:
labor negotiations Lady Macbeth eff
Page 438 and 439:
Mednick, Sarnoff Meehl, Paul meetin
Page 440 and 441:
novelty Nudge (Thaler and Sunstein)
Page 442 and 443:
t="-5%"> post-traumatic stress pove
Page 444 and 445:
Rationality and the Reflective Mind
Page 446 and 447:
Savage, Jimmie Save More Tomorrow S
Page 448 and 449:
Steiger, James H. stereotypes; caus
Page 450 and 451:
threats; possibility effect and 3-D
Page 452 and 453:
wealth, see money and wealth weathe
Page 454 and 455:
Grateful acknowledgment is made for
Page 457 and 458:
Table of Contents Introduction 1. T
Page 459:
Thank You W ant More Books? W e hop
show all

Thinking, Fast and Slow - Daniel Kahneman

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?