This is probably the longest book from the MBA reading list that I’ve read, but it’s also a book that I’ve heard a lot of good things about. So let’s dive into the review!

Thinking Fast and Slow is a very long book about how we think. To make things easier, Kahneman refers to our two main thinking processes as System 1 and System 2. System 1 operates quickly and automatically and is something like an instinctive process. System 2 is the conscious, reasoning self that also happens to want to avoid depleting itself/is prone to taking the easy way out. Sometimes, System 1 calls on System 2, but System 2 would really prefer to just let System 1 make the decisions and the way we think leads to all sorts of blind spots, like:

• Anchoring Effect – where one number, even if irrelevant, somehow becomes a standard by which we come up with another number.
• Priming – for example, the idea of money primes individualism, which means that our choices could have been influenced by something we didn’t even think was a factor.
• An inability to realise what the optimal sample size is (even if you have learnt it)
• The rational person/assumption that people will act rationally that economics depends on does not exist
• Two aspects of choice not predicted by the indifference curve – “First, tastes are not fixed, they vary with the reference point. Second, the disadvantages of a change loom larger than its advantages, including a bias that favors the status quo.”
• “A baisc rule of fairness, we found, is that the exploitation of market power to impose losses on others is unacceptable.”
• Framing – we are risk averse when options are presented in the form of “guaranteed gain of X, % chance of gaining Y” but risk seeking when options are presented in the form of “guaranteed loss of Y, % chance of losing Y”. So the same two probabilities presented in different ways could lead us to different choices
• A 5% increase from 0% to 5% feels a lot bigger than an increase from 51% to 56%.
• Let’s say there are two bad experiences: A, and B. A is 60s, and B is 90s but the last 30s is not as bad as the first 60s. If we’re made to go through both and just asked which do you prefer to have repeated (not mentioning the time), we might actually pick B because our memory of B is not as bad as our memory of A.

There might be more, but the book is very long and this is what I remembered. But each individual chapter is pretty easy to understand, and since Kahneman was writing his book for the office watercooler, each chapter ends with a few examples of how you might use the concepts brought up in the chapter, in the form of short remarks, rather than a short summary. That made it easier for me to check if I knew what has just been explained.

After reading this, I’ve realised that it’s very hard to be a completely rational person but we can try. If our biases can be identified, then it’s possible to put in the work needed to try and overcome them. That said, the length of this book is pretty intimidating, so I’m not sure if I’d recommend it – perhaps you could give it a go if you have some time?

Featured Image: Photo from Canva