WK9 Reading Decison-Making

• In memory of Amos Tversky
• The book presents the author's current understanding of judgment and decision making, shaped by psychological discoveries of recent decades
• The central ideas trace back to a seminar in 1969 at the Hebrew University of Jerusalem, where the author invited Amos Tversky as a guest speaker
• Amos Tversky was considered a rising star in the field of decision research, brilliant, voluble, and charismatic
• Amos Tversky and the author concluded that even experts like statisticians were not good intuitive statisticians
• The author and Amos Tversky discovered they enjoyed working together, and their collaboration over the next 14 years produced their best work
• Their research involved inventing questions and jointly examining their intuitive answers, identifying and analyzing intuitions that they believed would be shared by many people
• They proposed that people use simplifying heuristics (rules of thumb) to make difficult judgments, which can lead to predictable biases (systematic errors)
• Their article "Judgment Under Uncertainty: Heuristics and Biases" published in Science magazine in the 1970s challenged the prevailing assumptions about human nature and rationality
• The ideas of heuristics and biases have been used productively in many fields, including medical diagnosis, legal judgment, intelligence analysis, philosophy, finance, statistics, and military strategy
• The availability heuristic helps explain why some issues are highly salient in the public's mind while others are neglected, as the media's coverage corresponds to their view of what is currently on the public's mind
• The importance of issues is determined by the ease with which they are retrieved from memory, which is largely determined by the extent of coverage in the media
• Frequently mentioned topics populate the mind even as others slip away from awareness
• What the media choose to report corresponds to their view of what is currently on the public's mind
• Authoritarian regimes exert substantial pressure on independent media
• Public interest is most easily aroused by dramatic events and by celebrities, leading to media feeding frenzies
• There is little coverage of critical but unexciting issues that provide less drama, such as declining educational standards or overinvestment of medical resources in the last year of life
• A key reason for the broad appeal of "heuristics and biases" outside psychology was that the full text of the questions were included in the articles, allowing readers to recognize how their own thinking was tripped up by cognitive biases
• The use of demonstrations provided scholars from diverse disciplines an unusual opportunity to observe possible flaws in their own thinking
• The reaction to the work on heuristics and biases was not uniformly positive, with some criticism that it suggested an unfairly negative view of the mind
• The idea that our minds are susceptible to systematic errors is now generally accepted, and the research on judgment had far more effect on social science than the authors thought possible
• The authors' goal was to develop a psychological theory of how people make decisions about simple gambles
• The authors observed systematic biases in their own decisions, with intuitive preferences that consistently violated the rules of rational choice
• The authors' collaboration on judgment and decision making was the reason for the Nobel Prize that one of the authors received in 2002
• The book aims to present a view of how the mind works that draws on recent developments in cognitive and social psychology, including understanding the marvels as well as the flaws of intuitive thought
• The authors did not address accurate intuitions beyond the casual statement that judgment heuristics "are quite useful, but sometimes lead to severe and systematic errors"
• It is now clear that accurate intuitions of experts are better explained by the effects of prolonged practice than by heuristics
• Expert intuition involves no magic, but rather the recognition of familiar elements in a new situation and the ability to act appropriately
• Many professionals' intuitions do not arise from true expertise, but rather from the affect heuristic where judgments and decisions are guided directly by feelings of liking and disliking
• When faced with a difficult question, we often answer an easier and related question instead, usually without noticing the substitution
• The distinction between fast and slow thinking has been explored by many psychologists over the last twenty-five years
• The intuitive System 1 is more influential than our experience tells us, and it is the secret author of many of the choices and judgments we make
• The book explores the difficulties of statistical thinking, our excessive confidence in what we believe we know, and our inability to acknowledge the full extent of our ignorance and the uncertainty of the world
• The book provides a current view, informed by the two-system model, of the key concepts of prospect theory and ways human choices deviate from the rules of rationality

  
• The book introduces a distinction between two selves, the experiencing self and the remembering self, which do not have the same interests
• The concluding chapter explores the implications of the distinctions drawn in the book, including for organizations to improve the quality of judgments and decisions
• Experiencing self


  What makes this self happy is not quite the same as what satisfies the remembering self
• How two selves within a single body can pursue happiness raises some difficult questions, both for individuals and for societies that view the well-being of the population as a policy objective
• The book explores the implications of three distinctions: between the experiencing and the remembering selves, between the conception of agents in classical economics and in behavioral economics, and between the automatic System 1 and the effortful System 2
• The book includes two articles written with Amos that present the contributions that were cited by the Nobel committee