Daniel Kahneman is the psychology professor at Princeton University. He was awarded Noble Prize in Economics. Together with Amos Tversky, they did pioneering work on decision making and uncertainty.

In this book, Kahneman argues that

• We have two systems in our minds; System 1 and System 2
• System 1 operates automatic. It is fast and works with little or no efforts. It is instinctive and emotional

e.g. answering 2+2 requires no efforts and the response is quick i.e. 4

• System 2 is deliberate.  It is slow, requires efforts but is logical e.g.

e.g. Count ‘a’ in this paragraph. Your mind will start counting and will not guess.

• We use more of heuristics thinking and less of statistical thinking
• Cognitive Ease (Due to familiarity or feels true or good) leads us make systematic errors
• System 1 is weak and we need to be more deliberate.

Some of the key human biases are

1. Anchoring
2. Over Confidence
3. Availability
4. Framing
5. Loss Aversion
6. & many more…..

The way to block errors that originate in system 1 is to slow down and ask for reinforcement from system 2.  Seems easy! Awareness of these biases’ and practice can improve decision making.