- I have two minds – (1) Automatic (Fast) and (2) Thoughtful (Reasoning, slow)
- 1 acts quickly and emotionally, whereas 2 acts slowly and carefully.
- Majority of the mundane tasks are handled by 1 effortlessly. Ex. Walking on road and avoiding pit
- 1 is quite useful for things where short term results are expected and with no real impact on long term
- Knowing when 1 vs 2 is decision makers can help objectively analyze the responses and take corrective action if required
- All decisions can’t be given 2, that will be too inefficient and costly, so we need to use 1, but wisely
- Thinking hard and engaging 2 consumes real mental energy, which has only finite amount
- Deep Work (a book by Cal Newport as well) is usually accompanied by 2, whereas shallow work is by 1
- Attention is limited, thus multitasking is very costly and delivers poor outcome
- When mental energy is low(depleted), attention span as well as performance of 2 is degraded
- Always take significant life decisions when Mental Energy is at its peak
- What does our mind love most?
- Default thinking is lazy and shallow, it requires additional effort to think hard and deep, which 1 resists
- Without any additional effort, 2 will always approve decision made by 1, because of lazy nature
- Associative Nature of Lazy mind : connect ideas even if they logically have no connection. Ex. (Well Dressed -> Rich/Educated, Big House/Car -> Wealthy etc.)
- Lazy mind build/gather supporting evidence/stories fast, rather than checking the facts (Ex. liking a stock name -> finding supporting evidence to invest in it)
- This causes any pattern to feel meaningful even if it is not
- Mind Prefers Cognitive Ease, which is often a trap
- Repetitions usually enforces belief of correctness, even if it is not true. (Ex. 5 people saying a White ball Green, doesn’t make it Green)
- When things are easy we are less likely to question and miss the possible flaws
- Tough things requires engagement of 2, which makes us think harder and better
- Always question what seems obvious True.
- Mind expects normal things and catches surprises quickly, and creates stories to explain surprises. {It rained even when forecast was Sunny because of ABC)
- Mind tries to fit a cause to every effect even when it is irrelevant.
- Surprises leads to learning, when we think hard and engage 2
- Mind prefers to Jumps to conclusion even before it understand (Ex. Judging a book by its cover)
- 1 tries to fill in the gaps with assumptions rather than facts, thus first impression often mislead
- Resisting quick conclusion and I don’t know are two great skills to improve decision making
- Mind loves to prioritize feelings over logic replacing hard questions with easy emotional questions {Investing in a stock just because you like CEO)
- Trusting Gut feeling is natural but not always right
- When asked ‘Is he a good leader?’ The answer usually is ‘Do I like him?
- Usually we get confidence from ease/familiarity rather than evidence
- When same tasks is performed by 2, slow thinking is asking, ‘Did I answer the real question?
- What are mental Biases?
- We often go with first decision, rather than validating it.
- We also get swayed by content of information rather than reliability of the same.
- Our Mental laziness leads to cognitive bias, thus we embrace : Easy = familiar = true — even when false.
- Anchoring has deeper impression on our decisions than what we normally think. Ex. If a house worth $100k is advertised as $200k, we will most likely not start negotiations below $100k
- Our mind take the anchored numbers and work backwards adjusting that
- Similar judgement issues arises when e-com/quick shopping sites distracts us with Last Few Items, Showing huge %Off from MRP etc. They deliberately want us to focus on numbers and not the value of money we are getting
- When 1 is making decisions it is often swayed by availability bias
- Ex. News events talks a lot about Air accidents but not about road accidents, so when a person is asked to assess riskiness of Air vs Road travel, he/she will select Air Travel. When statistical data suggest otherwise
- We tend to overestimate what we see often and underestimate what we don’t.
- If it is easy to recall, we assume it happens a lot.
- When we are engaged in another effortful task, our mind tend to be affected more by ease of retrieval
- When we are in happy mood, in the feeling of being powerful or higher faith, we tend to rely on ease of availability
- Knowledgeable novice instead of true experts (Ex. people gambling on small chip just because they watched YouTube video or read a book/blog or received a tip with some technical/fundamental analysis)
- Our mind tend to give more importance to ideas which can be easily retrieved from memory.
- The idea of world in our head is not exact replica of reality, it is just our perception.
- Our mind tend to overestimated probability of unlikely events (Eg. Death in Airplane crash vs Road accident)
- Bayes theorem : New Prob = Base Rate X Evidence based likelihood
- Our mind ignore base rate in favor of similarity.
- For the mind, story is always more compelling than logic => inferior conclusions.
- Our mind is pattern seeker, believers in stories, and the stories we believe are simple. (Neglecting statistical reasoning)
- Regression to the mean is a fact of life, but it is not always recognized for what it is.
- We are prone to blame or reward individuals based on outcomes that are largely due to chance.
- We often assign too much weight to our initial impressions, rather than statistical significance.
- 1 makes us see the world as more tidy, predictable, and coherent than it really is. We are prone to overestimate how much we understand about the world and to underestimate the role of chance in events.
(In Progress)