Daniel Kahneman wrote it after doing loads of research on the subject. He starts out with a little story, telling about an interview he once had with a broker from the stock market that had recently purchased millions worth of shares from Ford motor company. Kahneman asked why he actually decided to buy these shares, the man explained that he was impressed about how they make cars over there. Kahneman figured that the broker had not based his purchase on the conclusion that the shares were undervalued but had based the buy upon his intuitions that it was a good car company.
With this example he starts the explanation about intuition heuristics (I needed to check that word too):
In essence: we all have two ways of thinking, the so called System I thinking and the thereby logically following System II thinking. System I is intuitive, reacts quickly and most of the time correctly on questions like: 2 + 2 = … , peace and … , the sky is … , your knees are closer to your eyes than your toes (or you are grand in acrobatics to prove me wrong), the direction a certain noise comes from and automatic behavior like that we swallow after we chew, we blink if an object comes close to our eyes, we know in a split second if someone looks angry and so on and so forth. System I is our automatic pilot that mostly lies out of our control.
System II is the deep thinker in us, the one we wish to use more and better in our lives. It is the one that can solve 17 x 24 after some thought. It is the one that can wonder about why skies are not violet. It’s the one that helps us when we need to make choices. It is rational and conscious and as we have control over system II, it carries away our predilection.
That being said, system I is actually constantly in the lead, it’s our boss. Number II only takes over if it’s getting to complicated for I. Actually, when you look at the story of the broker: you would like to think that the choice of buying shares is based upon statistics, a certain well thought through reason why the stocks were undervalued, which isn’t the case. Actually, system I is the boss of our broker and many alike. Based upon the feeling that Ford makes impressive cars he nudged over system II to purchase the stock.
Both systems have their own pros and cons. One cannot live without the other, it’s like pepper and salt. System I can influence system II and vice versa. Once you were taught that 2+2=4, system II hammered this into system I. System I is asking attention from system II if it hears a sudden loud noise. But this is to a certain point. You can decide not to look in the direction where the noise is coming from (which is what system I really likes you to do), but sudden noise still will distract system II, whether you want to or not.
System I and II can in that case be viewed as a set of communicating vessels, if system II is distracted by system I (for instance by a very annoying and far too loudly ticking clock), it loses some of its thinking capacity.
Also the other way around can happen: system II is so busy that system I does not notice things that can be very peculiar, like it was shown by Christopher Charbris and Daniel Simons that made the movie: the invisible gorilla.
But the thing is: system I is the boss. And you know what they say: the boss is always right. And so even when the boss is wrong (like when it wasn’t registering a gorilla) it is hard for the chief to accept its flaws. Your intuitions are always right, right?
This book is tremendously interesting and as a bonus: very well written. I certainly advice you to buy it if you haven’t already done so.
- We all have two systems of thinking in our heads (lucky us).
- System I is the intuitive quick thinker that can be seen as our autopilot, it’s the boss on which we have little control.
- System II is our co-pilot. It helps system I if it is in need of some serious thought. It solves puzzles like 17 x 24 and forms the rational and conscious part of our mind.
- System I and II can be seen as communicating vessels, if one needs all brain power the other is hold back in action mode.
- System I is boss, so quite naturally it doesn’t like to be wrong. They say that the stock market is based upon emotions. It even can panic like a human. And this is quite correct if you know that the people behind the steering wheel are all lead by their boss, system I is in full control.