Daniel Kahneman: Putting Your Intuition on Ice – The Knowledge Project

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Key Takeaways

  • When attempting to change the behavior of someone else, instead of pushing them to change, weaken the restraining force 
  • Behaviors don’t always reflect personality; they’re more often a function of the situation
  • To improve your decision-making: SLOW DOWN
  • When making decisions, think of options as if they were candidates. Break them up into dimensions and evaluate each dimension separately.
    • Then – Delay forming an intuition too quickly. Instead, focus on the separate points, and when you have the full profile, then you can develop an intuition.
  • The person who moves first in a negotiation has the advantage
    • Why? – The first number stated changes everyone’s view of what’s considered plausible and moves the discussion in that direction
  • Quotes to ponder:
    • “We believe in things, most of the time, not because we have good reason to believe them… We have beliefs because mostly we believe in some people, and we trust them. We adopt their beliefs. – Daniel Kahneman
    • “Having a lot of money doesn’t make you happier, but being poor makes you miserable” Daniel Kahneman
    • “If you really want to improve the quality of decision-making, use algorithms… wherever you can. If you can replace judgment by rules and algorithms, they’ll do better.– Daniel Kahneman

Books Mentioned

Intro

  • Daniel Kahneman has been conducting eye-opening experiments and research demonstrating the unreliability of human rationality for over 40 years
    • He’s the recipient of the 2002 Nobel Prize in Economics Sciences

Two Questions Daniel Has Always Pondered

  • Not – “Does God exist?”
    • But – “Why do people believe that he exists?”
  • Not – “What’s good or bad?”
    • But – “What makes people angry or indignant?”

Happiness vs. Life Satisfaction

  • Happiness has to do with your emotions (how you feel) 
  • Life satisfaction is how you feel about your life when you actually think about your life (and most of the time, you aren’t doing so, you’re just living)
  • “The circumstances that make people happy and the circumstances that make people satisfied with their life are not the same” – Daniel Kahneman
    • Happiness is mostly about being social and spending time around those you love
    • Life satisfaction is much more about money, prestige, and getting a good education
  • “I used to think life satisfaction was irrelevant… But after a few years, I realized that people don’t seem to care about how happy they’ll be in the future, but they do seem to want to be satisfied with their life.” – Daniel Kahneman
  • “Having a lot of money doesn’t make you happier, but being poor makes you miserable” – Daniel Kahneman
  • It seems to be the case that being happy and having a high life satisfaction both correlate to a longer life

Behavior Change

  • To change the behavior of another from A to B:
    • You can push them to change (add to the driving force) 
      • When you do this, the new equilibrium (the changed behavior) will exist in a state of higher tension (picture a spring that you push together) 
    • Or, you can ask the question – “Why aren’t they doing B already?”
      • AKA – weaken the restraining force (this is more optimal)

What does Daniel wish more people knew about psychology?

  • “Behaviors don’t necessarily reflect personality. They have a lot to do with the situation. When people behave in strange ways, look at the situation they’re in as well as the pressures of the situation causing them to act a certain way.” – Daniel Kahneman
    • The has to do with something known as “Fundamental Attribution Error” – When you see people acting in a certain way, you tend to think it’s because of their personality (when this isn’t actually the case – it’s because of the situation)
  • Motivation is complex
    • People do good things for a mixture of both good and bad reasons
    • People do bad things for a mix of both good and bad reasons
  • “If there is a point of educating people in psychology, it’s to make them less judgmental… Being judgmental doesn’t get you anywhere.” – Daniel Kahneman

Why is it so easy to give advice, yet so hard to follow our own?

  • Simply put, feelings get in the way of clear thinking
  • Another reason: loss aversion (we tend to value more what we give up compared to what we gain)
    • When a third party is making decisions on someone’s behalf, they don’t experience loss aversion

How Environment Affects Decision-making and Thinking

  • A straightforward way: if you’re “hot, bothered, and distracted” then your thinking won’t be optimal
  • Some colors are more calming than others
    • “You wouldn’t want to be in a red room making decisions” Daniel Kahneman

What gets in the way of clear thinking?

  • Our intuitive views and propensity to solve problems with ready-made answers
  • Emotions
  • Commitments to previous views
  • Ego
  • “We believe in things, most of the time, not because we have good reason to believe them… We have beliefs because mostly we believe in some people, and we trust them. We adopt their beliefs.” – Daniel Kahneman

How to Improve Decision-making Ability (Delay Your Intuition)

  • To improve your decision-making: SLOW DOWN
  • “If you really want to improve the quality of decision-making, use algorithms… wherever you can. If you can replace judgment by rules and algorithms, they’ll do better.”Daniel Kahneman
  • “When you’re making decisions, think of options as if they were candidates. Break them up into dimensions and evaluate each dimension separately.” – Daniel Kahneman
    • This is key: “Delay your intuition. Don’t try to form an intuition quickly. Focus on the separate points, and when you have the full profile, then you can have an intuition.”
      • In general, people form intuitions much too quickly (and those rapid intuitions aren’t always accurate)
  • Similar to delaying your intuition, delay the response
    • For example: You wouldn’t want to make a decision surrounding road safety policy after a massive accident in your community
      • Why not? – Your biases are too likely to influence the decision
  • Keep track of your decisions and how they turned out
    • This enables you to evaluate your procedures later and find the commonalities among decisions that turned out well

Judgment vs. Intuition

  • Judgment is the process of integrating a lot of information into a score of some kind
    • “Judgment is measurement, but it’s measurement with the instrument being your mind” – Daniel Kahneman
  • Fast judgment = pure intuition
  • Delayed judgment = fending off intuition
  • “In general, more educated people make better judgments” – Daniel Kahneman

Cogntive Biases

  • Daniel has said previously – “I’ve studied cognitive biases my whole life and I’m no better at avoiding them”
    • What hope do the rest of us have then? – “Not much”
  • Daniel gives an example of a cognitive bias (known as non-regressive prediction):
    • Picture a girl graduating from college. You’re given the knowledge that she was able to read at age 4.
      • Because of this, you likely get the impression that she was brilliant as a child (perhaps, subconsciously, we’d assume she was at the 90% percentile of intelligence)
    • If you were then asked what her graduating GPA was, you’d likely give an answer lying in the 90th percentile, due to the above
      • Our prediction becomes our impression when in reality they’re not all that related
  • If you’re conscious of biases like the above, you’re more likely to talk yourself out of it

Negotiations

  • “The person who moves first in a negotiation has an advantage.” – Daniel Kahneman
    • Why? – The first number stated changes everyone’s view of what’s considered plausible (it moves things in that direction)
  • Daniel’s advice:
    • If you’re in a financial negotiation, and the person who you’re negotiating with starts off with a value higher (or lower) than you think is fair, make a scene
      • Lose your temper/or get angry – it’s the best way to fight it
  • “Negotiations are not about trying to convince the other guy. It’s about trying to understand them. So again, it’s slowing yourself down. It’s not doing what comes naturally because trying to convince them is applying pressure. Arguments, promises, and threats are always applying pressure. What you really want is to understand what you can do to make it easy for them to move your way.” – Daniel Kahneman
    • This is similar to the above – don’t apply pressure, reduce the resistance 

Leadership

  • People prefer intuitive leaders – leaders that deliberate too much are viewed with suspicion (even if they shouldn’t be)
    • Barack Obama was at a disadvantage compared to George Bush because of this

Group Decision-Making

  • When making a decision as a group, have each person write down whatever decision they’re in favor of before the discussion begins
    • Why? – People tend to converge very quickly in a group discussion (therefore – it allows for a broader diversity of points of view)
      • It also forces people to be better prepared for the discussion

How to Hold More Effective Meetings

  • Discuss just ONE topic at a time
  • Similar to breaking decisions up into dimensions, do the same here
    • Break each topic up into dimensions and apply a score to each (based on how likely it is to influence the decision)
      • Then – discuss each dimension/score one at a time

Additional Notes

  • Daniel is in the process of writing a new book on noise and how it relates to decision-making
    • “Wherever there is judgment, there is noise, and more of it than you think” – Daniel Kahneman
    • How can you reduce noise? – Use algorithms when making decisions to minimize human judgment
  • Daniel worked with the famous psychologist, Amos Tversky, for quite some time
    • “Almost everything about working with him brings a smile to my face” – Daniel Kahneman
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