Understanding Intuition and Decision-Making by Professor Daniel Kahneman

Jul 5, 2024

Lecture: Understanding Intuition and Decision-Making by Professor Daniel Kahneman

Introduction

  • Speaker: John Boyd introduces Professor Kahneman
  • **Background: Kahneman's Career:
    • Bachelor's in experimental psychology and mathematics from Hebrew University, Jerusalem (1954)
    • Ph.D. from UC Berkeley in Experimental Psychology (1961)
    • Co-author of seminal paper on Prospect Theory with Amos Tversky (1979)
    • Nobel Prize in Economics (2002)
    • Lifetime Distinguished Contribution Award (American Psychological Association, 2007)
    • Senior Scholar at Woodrow Wilson School of Public and International Affairs at Princeton University
  • Topic of Presentation: New book "Thinking Fast and Slow"

Intuition Discussion

  • Two camps in intuition discussion:
    • Pro-intuition (Gary Klein, "Sources of Power")
    • Skeptics (Kahneman's camp)
  • Collaboration with Gary Klein:
    • 8-year collaboration leading to "A Failure to Disagree"
    • Agreement on boundary of intuition's effectiveness
    • Emotionally differing perspectives remain

The Two Systems of Thinking

System 1

  • Characteristics:
    • Automatic, fast, and effortless
    • Based on intuition and associative memory
    • Examples: Driving, braking, recognizing emotions
  • Functions:
    • Emotional reactions, immediate judgments
    • Skill and expertise learned over time
    • Can lead to false intuitions that feel subjectively accurate
    • Intuitive errors: e.g., Bat and ball problem (")$1.10 theory", 10c vs 5c)

System 2

  • Characteristics:
    • Deliberate, slow, and effortful
    • Requires attention and logical thinking
    • Examples: Mathematical calculations, making detailed plans
  • Physiological responses:
    • Pupil dilation during mental effort
  • Challenges:
    • Limited capacity for attention and control
    • Vulnerable to distractions and cognitive load
  • Functions:
    • Self-control and deliberate decision-making
    • Formal system preference, skeptical about human judgment's reliability

Key Psychological Concepts

  • Association Activation:
    • Ideas linked in a network; external stimuli activate related nodes
    • Examples: Threatening words causing physical reactions
  • Causal Intuitions:
    • Human tendency to seek causal explanations (often flawed)
    • Example: "Mother-Daughter blue eyes" perception
  • Substitution Effect:
    • Hard questions replaced with easier related questions unconsciously
    • Example: Riddle about bat and ball costs
  • Confidence and Fluency:
    • Subjective confidence often based on fluency and coherence, not on evidence
    • Overconfidence in intuition without substantive reasoning

Real-World Implications

  • Intuition in Medicine
    • Jerome Groopman: Favorable towards medical intuition
    • Atul Gawande: Prefer formal systems over intuition
  • Expertise and Training:
    • Domain-specific expertise in regular, rule-based environments
    • Example: Anesthesiologists vs. Radiologists
  • Stock Picking and Political Forecasting:
    • Market unpredictability undermining the development of reliable intuition
    • Long-term forecasts often no better than random
  • Advertisements and Media Influence:
    • Designed to target System 1, influence emotions and associations
  • Political Decisions:
    • Influenced by superficial judgments (e.g., facial competence predicting election outcomes)

Concluding Remarks

  • System 1 and System 2 as Fictitious Models:
    • Helpful for understanding mental processes
    • Importance of recognizing limitations and gaps in intuitive judgments
  • Audience Questions:
    • Discussed how System 1 could be influenced or trained
    • Addressed implications of mind-awareness on decision making and advertisements