This document summarizes key ideas from Daniel Kahneman's book "Thinking Fast and Slow" about two modes of thinking - System 1 thinking which is fast, automatic, and emotional and System 2 thinking which is slower, more deliberative, and logical. It describes various cognitive biases that result from System 1 thinking such as priming, familiarity, and the halo effect. It provides tips for avoiding cognitive biases in business contexts like hiring and planning. The overall message is that while intuitive thinking has its place, it's important to recognize cognitive biases and use deliberate, data-driven System 2 thinking when high stakes decisions are involved.

1. THINKING FAST & SLOW
the (sorta) quick version

2. DISCLAIMER
This is a long presentation that still contains no data
and barely summarizes the ideas in the book. For
evidence and more ideas, please read the book!

3. WANT TO READ IT ALL?
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4. WANT TO LEARN MORE?
Click on the header links.

5. TWO SYSTEMS

6. TWO SYSTEMS
1. System One: continuously and involuntarily
generates impressions, intuitions, intentions, and
feelings

7. TWO SYSTEMS
!
!
!
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System One: Our gut reaction. How we read
expressions, react to sounds, colours, and images. Our
immediate intuitions about problems. Not prone to
doubt.

8. TWO SYSTEMS
2. System Two: the conscious, reasoning self that has
beliefs, makes choices, and decides what to think
about and what to do

9. TWO SYSTEMS
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System Two: A slower, reason-based approach.
Considers evidence and questions assumptions.
Responsible for socially appropriate behaviour. Can
contain conflicting ideas at one time.

10. TWO SYSTEMS
“System 1 is generally very good at what it does: its models of familiar
situations are accurate, its short-term predictions are usually accurate as well,
and its initial reactions to challenges are swift and generally appropriate.
System 1 has biases, however, systematic errors that it is prone to make in
specified circumstances. As we shall see, it sometimes answers easier questions
than the one it was asked, and it has little understanding of logic and statistics.
One further limitation of System 1 is that it cannot be turned off.”

11. TWO SYSTEMS
“As a way to live your life, however, continuous vigilance is not necessarily good,
and it is certainly impractical. Constantly questioning our own thinking would
be impossibly tedious, and System 2 is much too slow and inefficient to serve
as a substitute for System 1 in making routine decisions.The best we can do is
a compromise: learn to recognize situations in which mistakes are likely and
try harder to avoid significant mistakes when the stakes are high.The premise
of this book is that it is easier to recognize other people’s mistakes than our
own.”

12. TWO SYSTEMS
!
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Note: If our System 2 is
engaged or depleted, we will
basically believe anything.

13. SOME COGNITIVE BIASES
& ILLUSIONS

14. PRIMING
Give an idea of what might be the category or suggest
an answer and we will see things through that bias.

15. WASH

16. CHICKEN

17. SO_P

18. MARKETING/PRODUCT
!
!
Get people to smile, nod, etc. and they will be primed
for positive feelings. Even if they just smile physically.

19. FAMILIARITY
Familiarity = truth in our minds.

20. FAMILIARITY
Our minds are inclined to believe unknown things when
they sound familiar.

21. HIGH DEFINITION
Our minds are more inclined to believe a message when
it’s conveyed in high quality, high contrast formats. I.e. a
bright-dark blue for text against white background.

22. USE SIMPLE LANGUAGE
Use simple language (direct wording, fewer metaphors
and jargon, fewer syllables when fewer will do).
!
Our minds are more inclined to trust and believe simple
language. We naturally see complex language as less
intelligent and less trustworthy when it’s in a context
that could be simpler.

23. RHYME
!
!
!
!
!
!
We are more likely to believe ideas when they are phrased in
rhyme. (i.e. a rhyming catchphrase).
!

24. PRONOUNCEABLE NAMES
If you quote someone for a testimonial, it’s better to use
a source with a name that is easy to pronounce.
Generally people feel less trust towards people with
names they feel uncomfortable pronouncing (even if this
seems intolerant).

25. BUSINESS PRINCIPALS

26. CAUSALITY
!
!
We are overly quick to ascribe causality. Many things we
think are causal are coincidental, based on luck or
happenstance.

27. CAUSALITY
“Statistics produce many observations that appear to
beg for causal explanations but do not lend themselves
to such explanations. Many facts of the world are due to
chance, including accidents of sampling. Causal
explanations of chance events are inevitably wrong.”

28. BUSINESS PRINCIPALS
We will more often search for evidence that upholds
our beliefs than seek to disprove them, even if the
beliefs are illogical.

29. THE ILLUSION OF VALIDITY
When you are confident in a prediction or an
assessment of a person, company, or idea, even when
faced with evidence to the contrary you will continue to
believe in the assessment and your mind will construct
an argument to support it

30. THE HALO EFFECT
!
!
When you like someone, you are prone to expect they
will behave in ways that you approve of. That belief
makes you like them even more. (Conversely, when you
don’t like someone, you have the expectation they will
behave in ways you don’t like).

31. BUSINESS PRINCIPALS
In hiring, this can mean that if you get a good impression
of someone in one interview, you won’t give up that
impression even if they weren’t as stellar in the next
round of interviews. It feels uncomfortable (cognitive
dissonance) to feel our impressions aren’t correct.
.

32. WYSIATI
!
!
!
!
If you get evidence only from one side of an issue or
argument, you will strongly be likely to interpret the
situation though that lens. Kahneman calls this “What
You See Is All There Is” (WYSIATI)..

33. WYSIATI
WYSIATI also is implicated in a number of other
cognitive biases:

34. OVERCONFIDENCE
“As the WYSIATI rule implies, neither the quantity nor the
quality of the evidence counts for much in subjective confidence.
The confidence that individuals have in their beliefs depends
mostly on the quality of the story they can tell about what they
see, even if they see little.
!
We often fail to allow for the possibility that evidence that
should be critical to our judgment is missing—what we see is all
there is. Furthermore, our associative system tends to settle on
a coherent pattern of activation and suppresses doubt and
ambiguity.”

35. FRAMING EFFECTS
“Different ways of presenting the same information often evoke
different emotions. The statement that ‘the odds of survival one
month after surgery are 90%’ is more reassuring than the
equivalent statement that “mortality within one month of
surgery is 10%.”
!
Similarly, cold cuts described as ’90% fat-free’ are more
attractive than when they are described as ’10% fat.’ The
equivalence of the alternative formulations is transparent, but an
individual normally sees only one formulation, and what she sees
is all there is.”

36. THE LAW OF SMALL NUMBERS
“We often think a small sample size is equal to a large
sample, even though a small sample is inherently not as
trustworthy. We pay more attention to the content of
messages than to information about their reliability, and
as a result end up with a view of the world around us
that is simpler and more coherent than the data justify.”

37. ANCHORING
If you put an initial value on something, it’s a strong
influence on how much it’s worth in people’s minds (or
if you suggest an answer to something, people will factor
their ideas of the answer with that anchor).

38. BUSINESS PRINCIPALS
“Arbitrary rationing is an effective marketing ploy”
!
We value something more when it seems scarce, even if
the scarcity is artificial.

39. PLANS
“In preparing for battle, I have always found that plans are useless, but
planning is indispensable.”
-Dwight D. Eisenhower
!
If you make a plan, the most effective approach is to
consider the ways in which the plan could go wrong.
Also, check out the outcomes of similar plans.

40. THE PRE-MORTEM
“The procedure is simple: when the organization has
almost come to an important decision but has not
formally committed itself, Klein proposes gathering for a
brief session a group of individuals who are knowledgeable
about the decision.
!
The premise of the session is a short speech: “Imagine that
we are a year into the future. We implemented the plan as
it now exists. The outcome was a disaster. Please take 5 to
10 minutes to write a brief history of that disaster.”

41. AVAILABILITY BIAS
We think things are more common because they
receive more attention. We are more likely to ask
ourselves “How do I feel about that?” rather than
“What do I think about that?” We don’t look at how
questions are framed, i.e if a toxic risk is framed in
deaths per million or particles of toxin per million.

42. STEREOTYPING
!
!
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Stereotypes and predicting by representativeness: we often ignore
actual statistical information in favour of our own predictions
based on familiar traits.
!
Stereotyping is not per se “negative” in this context. Our minds
need to organize and type things to function.

43. BUSINESS PRINCIPALS
“Anchor your judgment of the probability of
an outcome on a plausible base rate.”

44. BUSINESS PRINCIPALS
“Question the diagnosticity of your
evidence.”

45. REGRESSION TO THE MEAN
We tend to reward or punish exceptional behavior
when in general, those states are a function of luck.
Most people and performance regresses to the mean,
i.e. if you do very well, you will likely not do as well next
time, or if you do very poorly, you will likely improve.

46. HINDSIGHT
!
!
People believe they knew the past would turn out as it
did or to blame others for not acting on unknowns.

47. THE FOCUSING ILLUSION
“Nothing in life is as important as you think it is when
you are thinking about it.”

48. HIRING
“If you are serious about hiring the best possible person for the job, this
is what you should do. First, select a few traits that are prerequisites for
success in this position (technical proficiency, engaging personality,
reliability, and so on). Don’t overdo it— six dimensions is a good
number.
!
The traits you choose should be as independent as possible from each
other, and you should feel that you can assess them reliably by asking a
few factual questions. Next, make a list of those questions for each trait
and think about how you will score it, say on a 1–5 scale.You should
have an idea of what you will call “very weak” or “very strong.”

49. HIRING
“These preparations should take you half an hour or so, a small investment that can
make a significant difference in the quality of the people you hire. To avoid halo
effects, you must collect the information on one trait at a time, scoring each before
you move on to the next one. Do not skip around.
!
To evaluate each candidate, add up the six scores. Firmly resolve that you will hire
the candidate whose final score is the highest, even if there is another one whom
you like better—try to resist your wish to invent broken legs to change the ranking.
!
A vast amount of research offers a promise: you are much more likely to find the
best candidate if you use this procedure than if you do what people normally do in
such situations, which is to go into the interview unprepared and to make choices
by an overall intuitive judgment such as “I looked into his eyes and liked what I saw.”

50. CONCLUSION:
TRUST YOUR GUT
BUT THINK TWICE
QUESTION
ASSUMPTIONS
USE DATA WISELY

51. Thanks!
Laure Parsons
Chief Storyteller
@olark