Thinking, Fast and Slow
Daniel Kahneman · 2011
Nobel Prize-winning psychologist Daniel Kahneman spent a career studying how humans actually think. The book introduces the now-famous distinction between System 1 (fast, automatic, intuitive, emotional) and System 2 (slow, deliberate, effortful, rational) thinking. System 1 runs most of our lives without our awareness. It makes snap judgments using cognitive shortcuts that produce predictable, systematic errors called cognitive biases. Kahneman catalogues dozens of these: anchoring (the first number you see distorts every estimate that follows), availability bias (events you can easily recall feel more probable than they are), overconfidence (humans consistently overestimate their own knowledge), and loss aversion (the pain of losing is psychologically about twice as powerful as the pleasure of gaining ). Every person who has ever made a financial decision, hired an employee, or tried to predict the future needs to understand this book.