do you think you make your own decisions is it easy to manipulate you before you answer let me show you something I'll describe the characteristics of two persons for each of them I will say five words while I say the words try to decide who is evil and who is a good person please note the first answer that comes to your mind okay ready the first person love care ordinary take dark the second person dark take ordinary care love I'm sure that most of you thought that the first person is good and the second one is evil but the words I said for both persons are the same I simply changed the order of the words and you made a completely wrong decision in order to explain why we can be so easily manipulated and make wrong decisions I will review the book called Thinking Fast and Slow written by Daniel Kahneman Kahneman is an economist and psychologist who won the Nobel Prize in 2002 for his work in the field of economy the information in the book is simply mind-blowing the cost of not reading this book is very high regardless of your profession in life it can save you from making bad decisions and losing tons of money the author starts the book by introducing the concepts of system 1 and system 2. in order to make it simple let me explain it to you this way there are two people sitting in your brain the first person is called system one and the second person is called system two system one works automatically intuitively involuntarily and effortlessly imagine system one is your schoolmate who always talks a lot in the class does not think before he speaks knows very little but rushes to answer every question in contrast system 2 is very slow he requires focusing Computing analyzing and taking deliberate actions and system 2 is like another schoolmate who sits in the corner silently is not very social usually doesn't speak a lot but he's very smart from an evolutionary point of view both systems are important for example if we didn't have system one then we would not be able to run away automatically when we saw a bear and if we did not have system two then we wouldn't be able to focus in solve complex problems each system has its own place but problems happen when we apply the wrong system the majority of the time it's system 1 which always gets in front of system two and leads us to make wrong decisions this is mainly because system 2 is very slow and he doesn't want to wake up and work after introducing system 1 and system 2 the author talks about the different biases that cause a contradiction between these two systems one of the biases that Kahneman talks about is called priming priming simply means being exposed to one thing that affects your behavior and decision for the subsequent thing for example the small experiment we did at the beginning of the video is a perfect example the first word primed how you think and make a decision when you heard the first word for the first person you were 90 sure that this person was a good person after the second third words you were already a hundred percent sure in major final decision word four and five had almost no impact on your final decision the same thing happened with the second person there's a famous Vine experiment where on some days they played French music in the restaurant and people started to buy more French wine on other days they played German music and people bought more German wine a simple change of Music completely changed the buying behavior of the people now let's see how we can use priming for our benefit in our daily life for example when you wake up and look around in your room do you see the things that make you feel good and happy if not then it will affect your whole day after you wake up if you spend two minutes and show gratitude for the things you already have such as your family your health and your friends it can change your attitude about how you handle problems when you go to an interview or meet someone important pay close attention to how you say hello how you handshake and how you look as you saw in the above example the first one or two things are enough for us to make a final decision if you have a website and your selling something then study what the first two things are that your customers see and how it makes them feel in order to show the power of priming I'll give you an example from my own experience when I was buying a flat I did not use any real estate agent or any other external services for evaluating the flats because of this I knew that sellers could easily hide some problems from me so I decided to apply the priming principle to make the sellers act honestly and morally at the beginning of every conversation with the seller I always started with this sentence thanks a lot for your time I hope we reach a fair agreement at any time if you feel that I'm being unfair or saying something that is not correct please stop me and we'll discuss it again I simply want a fair and ethical agreement for both of us this might sound like a simple sentence but it had a huge impact on the behavior of the sellers whenever I started the conversation with this sentence sellers were very careful about the things they were telling me during the entire meeting I could see that they were trying very hard not to lie in some cases they even told me about the problems that might happen after five years two sellers even openly recommended not to buy their Flats because they thought that based on my situation it wouldn't be a good fit for me this simple sentence did not just save me thousands of dollars it also turned every meeting into a pleasant experience priming can also be negative for example when you constantly criticize yourself and say you're not good enough you can't do that you're priming yourself for failure you don't notice it but these words turn into a behavior very quickly priming works on a subconscious level and you completely fail to see its effects for example research shows that asking people simply to read words associated with impolite Behavior subsequently influenced them to behave rudely and interrupt another's conversation now just think for a moment if simply reading impolite words influences your behavior badly then can you imagine what negative thoughts do to you thoughts are much more powerful than reading words because they involve imagination and emotions now let's talk about loss aversion bias imagine I come to you and offer you to play a game in which I'm going to flip a coin and if you win I will give you ten thousand dollars but if you lose you will give me ten thousand dollars you have a fifty percent chance to win and a 50 chance to lose would you play such a game I'm sure your answer would be no even though the amount of money you are going to win and lose is equal I have to offer a much higher reward in order to make you play such a game the amount of space for negative emotions on our brain is three times larger than the space for positive emotions negative feelings coming from the loss are much stronger than the positive ones coming from the gain putting it even shorter we simply hate losing and that creates loss aversion bias let's see how we can use this knowledge in our favor for example if you are convincing someone to do something then don't always talk about the gains they will get also tell them about the losses they will face loss aversion can be very dangerous and limit us from acting especially when it comes to starting a new idea or business when we think about the risks we will face we get paralyzed one way to reduce the effects of loss aversion is to look at the long-term benefits rather than focusing on the short term and its problems sunk cost sunk cost is any past cost that has already been paid and cannot be recovered for example let's say you buy a ticket to a concert on the day of the event you catch a cold even though you are sick you decide to go to the concert because otherwise you would have wasted your money the exact same thing happens with our business or project despite the losses we continue putting money and effort into the business just because we've spent money on it in the past we continue staying in a bad relationship because we have spent so much effort to build it logically speaking what you spent until this point has no correlation with the future success or failure of your business or relationship right now you might think that you are logical and your past spending does not affect your future decisions if this is the case then why do you still keep all those clothes you don't wear they occupy tons of space in your wardrobe but you don't want to throw them away because you paid good money for them why don't you throw away the old furniture that occupies a big space in your room is it worth something or is it just you paid money for it in the past why don't you throw away the candies you bought in the past even though you're on a diet right now in order to make all these decisions we need system two to work but unfortunately it's too lazy framing bias let's say you feel sick and go to the doctor after the checkup the doctor tells you that there is a 10 chance that you will die and then you go to another doctor and this one tells you that there is a 90 chance that you will live from the statistical point of view both doctors told you absolutely the same thing however you would feel much worse when you hear that you have a 10 chance to die this is called framing Kahneman says that the choices we make are heavily influenced by the way they are introduced to us different wordings settings and situations will have a powerful effect in how we make decisions it works as a physical frame on a picture if you put the painting in a red frame it brings out the red in the painting putting the same painting in a blue frame brings out the blue the halo effect Attractive people are perceived to be smarter funnier and more likable than less attractive if two women committed the exact same crime we tend to give lighter punishment to the more attractive one it makes absolutely no sense but our system one gets influenced by the physical appearance and other irrelevant characteristics that have nothing to do with the decision we are making for example if an employer views the applicant as attractive or likable they are more likely to also rate the individual as intelligent competent and qualified so next time when you're choosing a business partner or when you're taking advice from someone ask yourself if the person really has valuable skills and knowledge or if you are being impacted by their appearance and other irrelevant things such as nicer car Rich lifestyle Etc anchoring let's say you want to buy a leather jacket and find a very nice one in the shop you check the price and see that it is 400 and think that that's expensive so you decide to put it back but when you put it back you notice that you had checked the wrong price and the real price is actually two hundred and fifty dollars suddenly the jacket will look cheaper to you because of the initial number you saw even if it was a wrong number this is called anchoring humans tend to rely heavily on the first piece of information they hear or see and then make further judgments this is one of the reasons why car dealerships put their most expensive models at the front of the display room so that when you pass them and see other normal priced cars they suddenly look cheaper to you again logically speaking previous numbers are things we see should not influence our decisions but they do a lot one way to protect yourself against anchoring is to have a limit in your mind before you start doing work for example if you're going shopping set a mental amount for how much you'd be willing to pay and then check the price tag if it's more than your limit you're out of luck the endowment effect the endowment effect is an emotional bias that says that once we own something or have a feeling of ownership we irrationally overvalue it regardless of its objective value this is the principle behind test driving cars and letting consumers play with the products the longer people spend interacting with the product the greater the sense of ownership becomes the same thing goes for free trials with software products and online services too the more time people spend using and customizing them the greater the sense of ownership becomes and the harder it is to give up the endowment effect is one of the reasons we love Ikea furniture when we buy furniture from Ikea we spend time building it and all of a sudden it becomes something we created and because of that we love it even more the endowment bias influences our decisions a lot so always ask yourself if the things you are supporting are worth supporting or if it is because it's yours is your old Ikea furniture you want to sell worth the price you are asking or are you being influenced by the endowment effect is the idea you are defending in your team really a good idea or are you supporting it because it came from you confirmation bias three years ago I was trading on one of the trading platforms and after several days I read somewhere that the company that I was trading with was a scam so I jumped on my computer and typed this search is this company a scam and guess what I found a bunch of people saying that it was a scam so I panicked and withdrew all my money even lost a lot of money because I exited my positions early after several days I was researching other trading platforms and realized that there are many similar bad comments for the majority of these companies which started to look suspicious because not all of them could be bad later I learned that the company was not a scam it's just that I Googled a biased question and only read bad comments that supported my suspicions and beliefs in Psychology this kind of behavior is called confirmation bias confirmation bias is the tendency to search for and find evidence that supports our opinions beliefs and disregard the rest we humans interpret all new information in a way that our previous beliefs and conclusions stay intact simply to say we forget that a coin has two sides and only focus on one side which supports our beliefs if you want to believe in something you will find evidence to support it you can even find videos telling you that the Earth is flat if you believe in Flat Earth theory confirmation bias affects all of us and it is everywhere for example people generally prefer to spend more time looking at information that supports their political point of view while neglecting the rest of the information that contradicts their view confirmation bias can cause doctors to search for new information in a manner to confirm their initial diagnoses while ignoring the signs that can prove their diagnoses wrong it's very difficult to combat confirmation bias however we can reduce its dangers by following the next three steps first accept that it exists to solve a problem you first need to accept that you have a problem second always seek contrary advice it's usually painful to listen to someone who has the opposite view but it can help you see the red flags maybe your greatest business idea really sucks but you want it to succeed so bad that you only see the positive signs and ignore the lack of demand and go ahead without validating the idea and testing it properly three don't ask confirming questions as I did in the example above try asking more neutral questions instead if you liked this video then check out the playlist you see on your screen I've summarized multiple psychology books on this channel before thanks for watching and don't forget to subscribe for more book summary videos