Thinking Fast and Slow by Daniel Kahneman Re-read Week 39: Concluding Notes

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When I introduced the logistics of the re-read of Thinking Fast and Slow on April 20, 2019, I anticipated that we would complete in 42 weeks. Doing the math, we kicked the re-read off 294 days or 42 weeks. Applause, please!

I now have read this book twice.  It has influenced my practice both times I read it. Thinking Fast and Slow popularized many of the concepts that are now called behavioral economics and introduced me to cognitive biases. Over the years I have done several presentations on the impact of cognitive biases on process improvement, software development, and testing. Kahneman helped me to stop viewing behavior as the outcome of straight forward maximization equations and something that incorporated more human behaviors. Biases deeply influence how we react. 

 

Thinking Fast and Slow by Daniel Kahneman Re-read Week 38: Conclusion Chapter

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This week we complete the material in Thinking Fast and Slow. The Conclusion Chapter is the last of the main material in the book. There are two appendices, notes and an index, I will leave those to the readers of the blog to consume at their leisure. Next week we finish the re-read in earnest with a few closing thoughts. 

 

Thinking Fast and Slow by Daniel Kahneman Re-read Week 37: Chapters 37 and 38: Experienced Well-Being and Thinking About Life

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We are quickly closing in on the completion of the re-read of Thinking Fast and Slow. Today we are tackling the last two chapters before Kanhneman’s conclusions. Assuming “God willing and the creek don’t rise” (an Americanism), we will begin Crucial Conversations in three weeks. I have purchased my copy and have started reading the book. 

 

Thinking Fast and Slow by Daniel Kahneman Re-read Week 36: Chapter 36: Life As A Story

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Two things before we dive in this week.  

The next book in our Re-read Saturday Feature is Crucial Conversations Tools for Talking When Stakes Are High, Second Edition by Patterson, Grenny, McMillan, Switzler.  I have never read this book, I just ordered the book using the link https://amzn.to/34RuZ6V (using the link helps support the blog and podcast). If you do not have a copy or have tossed it at someone during a crucial conversation, it is time to buy a copy. Please use the link above!  

Secondly,  Business Agility Conference (March 11 -12, 2020 in New York City) is sponsoring the Software Process and Measurement Podcast. If you are a friend on the podcast and blog and are shopping for a great business agility conference, this one I recommend. Check out the conference at http://bit.ly/2SmOJMS, and use the special code “spamcast” to get a 20% discount!  

Chapter 36 of Thinking, Fast and Slow, is titled Life As A Story. This chapter focuses on two closely related biases that impact the stories we tell about our lives. Early in my career, the team I was working on had to do an install on a Friday evening just before midnight (retail organization and by midnight the stores were closed and settled).  We had been working on a piece of functionality for several months and tonight it was rolling out! We were psyched, it had been a great effort and we had done some very cool work. One weird thing had happened right after lunch, a team member had quit. He had just walked out. My memory of the project to that was stelling.  Telling the story after that night, it was different. We discovered the person who had walked out that day had written and committed a stub built to fool the tests about thirty minutes before the system was supposed to go live. A lot of coffee and 4 hours later we had coded the functionality and tested it. We were late and exhausted. This is just the kind of story that is illustrative of the points in this chapter. Afterward, none of the stories recognized the time before that fateful evening. Everyone of repackaged the events to tell the of our crazy evening. Kahneman calls the part of the person doing the remembering, the “remembering self.” People compose stories and keep them for future reference. The idea that stories are important is supported by how System 1 Thinking works. It connects ideas and memories to generate narratives.  

 

Thinking Fast and Slow by Daniel Kahneman Re-read Week 35: Chapter 35: Two Selves

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Chapter 35, titled Two Selves, begins Section Five.  Kahneman starts this chapter by discussing the concept of experienced utility. Berridge and O’Doherty define experienced utility as “the hedonic or pleasurable experience produced by the outcome when eventually gained.” A person that was attempting to maximize experienced utility would make decisions that yield the most pleasure over other attributes.  

 

Thinking Fast and Slow by Daniel Kahneman Re-read Week 34: Chapter 34: Frames and Reality

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Chapter 34 highlights a number of critical ideas that are germane in today’s environment. Kahneman begins the chapter with the statement that classic economists’ beliefs and preferences are reality bound. Meaning that “objects of the choices are states of the world, which are not affected by the words chosen to describe them.” Stated differently, classic economic theory sees decisions as a set of equations and does not account for the emotion (System 1 thinking) that words generate in decision making. Kahneman uses the results of the 2006 World Cup.  In the finals, France lost and Italy won. Both statements describe the same event. They are equivalent, but if you were rooting for France, saying France lost will evoke different emotions and memories than saying Italy won. System 1 thinking generates different meanings based on human emotions and bias. In 2020 manipulating people by evoking System 1 thinking is called spin. 

 

Thinking Fast and Slow by Daniel Kahneman Re-read Week 33: Chapter 33 – Reversals

Kahneman starts chapter 33 by contrasting the payout from two fictional court cases – one that occurs in a store a shopper normally goes to and the second In a store the shopper almost never commerces in. When the two outcomes were experimentally evaluated together neither evoked a different payout. When evaluated separately, the outcome was different. The effect of evaluating each incident separately allows System 1 thinking to use substitution and intensity matching to create an emotional scale. In the experiment, there was a higher payout for the incident that happened in the store they frequented less. Kahneman uses the term poignancy, closely related to regret, in order to describe the effect. This effect happens when people grant a higher value or more emotion to something that happens when they act out of the ordinary. The saying “ woulda, shoulda, coulda” sums the feeling up for this effect. The take away for this portion of the chapter is that comparisons between two outcomes create an environment that invokes System 2 thinking which reduces bais and allows clearer decision making. When selling a change program or an experiment, you need to step back and determine how to package the argument. Separating decisions allows attributes to come into play that would generate poignancy which favors the status quo (resist ideas that might cause failure for doing something outside the norm). Separating decisions that could be compared, opens the door to reversals.

 

Thinking Fast and Slow by Daniel Kahneman Re-read Chapter 32: Keeping Score

Daily life seems to be a combination of action and inaction of getting things done or listening to people tell you about what they have done, but the constant is that everyone is keeping score. Perhaps not consciously, but everyone has a set of mental accounts. Chapter 32 explores how those tallies shape preferences and motivate actions.

 

Thinking Fast and Slow by Daniel Kahneman Re-read Chapter 31: Risk Policies

Happy Saturday! Next week begins the poll for the next book. 

Chapter 31 begins by reminding the reader of the idea that people tend to be risk-averse in the domain of gains and risk-seeking in the domain of losses. Stated less academically, people will accept less for an outcome from a sure bet than if the same bet was is less than certain. On the loss side, most people will avoid a certain loss to take a gamble on an outcome that has some chance at a positive outcome even when the probability is low and the loss will be higher. As Kahneman has pointed out in earlier chapters, people are not perfect logisticians when it comes to making decisions. 

 

Thinking Fast and Slow by Daniel Kahneman Re-read Week 30: Chapter 30 – Rare Events

Kahneman begins this chapter with a story about how Israelis reacted to the suicide bombings of the early 2000s.  While the bombings were rare, System 1 Thinking combined with an availability cascade caused an overstated impact on people’s behavior.  He goes further and points out that lotteries have the same basic pattern of behavioral impact. In both cases people overweight unlikely outcomes. The chapter is built on two premises: