Quotes from Daniel Kahneman

We are confident when the story we tell ourselves comes easily to mind, with no contradiction and no competing scenario. But ease and coherence do not guarantee that a belief held with confidence is true.

plausible interpretation is that higher income is associated with a reduced ability to enjoy the small pleasures of life. There is suggestive evidence in favor of this idea: priming students with the idea of wealth reduces the pleasure their face expresses as they eat a bar of chocolate!

It's a wonderful thing to be optimistic. It keeps you healthy and it keeps you resilient.

If you come upon an observation that does not seem to fit the model, you assume that there must be a perfectly good explanation that you are somehow missing. You give the theory the benefit of the doubt, trusting the community of experts who have accepted it.

when faced with a difficult question, we often answer an easier one instead, usually without noticing the substitution.

Cognitive strain, whatever its source, mobilizes System 2, which is more likely to reject the intuitive answer suggested by System 1.

understanding a statement must begin with an attempt to believe it: you must first know what the idea would mean if it were true.

She has no evidence for saying that the firm is badly managed. All she knows is that its stock has gone down. This is an outcome bias, part hindsight and part halo effect." "Let's not fall for the outcome bias. This was a stupid decision even though it worked out well.

A basic rule of fairness, we found, is that the exploitation of market power to impose losses on others is unacceptable. The

The exaggerated faith in small samples is only one example of a more general illusion—we pay more attention to the content of messages than to information about their reliability, and as a result end up with a view of the world around us that is simpler and more coherent than the data justify.

before an issue is discussed, all members of the committee should be asked to write a very brief summary of their position. This procedure makes good use of the value of the diversity of knowledge and opinion in the group. The standard practice of open discussion gives too much weight to the opinions of those who speak early and assertively, causing others to line up behind them.

System 1 represents sets by averages, norms, and prototypes, not by sums. Each

Two Systems This book has described the workings of the mind as an uneasy interaction between two fictitious characters: the automatic System 1 and the effortful System 2. You are now quite familiar with the personalities of the two systems and able to anticipate how they might respond in different situations.

I propose a simple account of how we generate intuitive opinions on complex matters. If a satisfactory answer to a hard question is not found quickly, System 1 will find a related question that is easier and will answer it. I call the operation of answering one question in place of another substitution.

for a large majority of fund managers, the selection of stocks is more like rolling dice than like playing poker. Typically at least two out of every three mutual funds underperform the overall market in any given year.

WYSIATI—what you see is all there is.

Expert intuition strikes us as magical, but it is not. Indeed, each of us performs feats of intuitive expertise many times each day.

If you can't solve a problem, then there is an easier problem you can solve: find it." P

rationality should be distinguished from intelligence. In his view, superficial or "lazy" thinking is a flaw in the reflective mind, a failure of rationality.

anchoring effect. It occurs when people consider a particular value for an unknown quantity before estimating that quantity

The attentive System 2 is who we think we are. System 2 articulates judgments and makes choices, but it often endorses or rationalizes ideas and feelings that were generated by System 1. You may not know that you are optimistic about a project because something about its leader reminds you of your beloved sister, or that you dislike a person who looks vaguely like your dentist.

People believe they capture complexity and add subtlety when they make judgments. But the complexity and the subtlety are mostly wasted—usually they do not add to the accuracy of simple models.

System 1 will detect that a person described as "a meek and tidy soul, with a need for order and structure, and a passion for detail" resembles a caricature librarian, but combining this intuition with knowledge about the small number of librarians is a task that only System 2 can perform—if System 2 knows how to do so, which is true of few people.

Jumping to conclusions is efficient if the conclusions are likely to be correct and the costs of an occasional mistake acceptable, and if the jump saves much time and effort. Jumping to conclusions is risky when the situation is unfamiliar, the stakes are high, and there is no time to collect more information. These are the circumstances in which intuitive errors are probable, which may be prevented by a deliberate intervention of System 2.