On this episode, we talk about a few key points from Daniel Kahneman’s book Thinking Fast And Slow. We cover topics on The Law Of Small Numbers which includes; Being Fooled By Randomness, The Hot Hand, And Sample Size. Then We Jump Over To Anchors and The Power Of Suggestion. We end with The Illusion Of Understanding which includes; Black Swan, What You See Is All There Is, Hindsight Bias and finally Outcome Bias.
THE LAZY SYSTEM 2
One of the main functions of System 2 is to monitor and control thoughts and actions “suggested” by System 1, allowing some to be expressed directly in behavior and suppressing or modifying others.
For an example, here is a simple puzzle. Do not try to solve it but listen to your intuition.
A bat and ball cost $1.10
The bat cost one dollar more than the ball.
How much does the ball cost?
A number came to your mind. The number, of course, is 10: 10¢. The distinctive mark of this easy puzzle is that it evokes an answer that is intuitive, appealing, and wrong. Do the math, and you will see. If the ball costs 10¢ then the total cost will be $1.20 (10¢ for the ball and $1.10 for the bat), not $1.10. The correct answer is 5¢. It is safe to assume that the intuitive answer also came to the mind of those who ended up with the correct number - they somehow managed to resist the intuition.
Excerpt from Thinking Fast and Slow by Daniel Kahneman page 44
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