From a lecture by Daniel Kahneman, presented by Skeptics Society at CalTech, Sunday, November 6, 2011.

In Thinking, fast and slow (2011), Kahneman takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive and emotional; System 2 is slower, more deliberative and more logical. Kahneman exposes the extraordinary capabilities — and also the faults and biases — of fast thinking, and reveals the pervasive influence of intuitive impressions on our thoughts and behavior. The impact of loss aversion and overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the challenges of properly framing risks at work and at home, the profound effect of cognitive biases on everything from playing the stock market to planning the next vacation — each of these can be understood only by knowing how the two systems work together to shape our judgments and decisions.

Engaging the reader in a lively conversation about how we think, Kahneman reveals where we can and cannot trust our intuitions and how we can tap into the benefits of slow thinking. He offers practical and enlightening insights into how choices are made in both our business and our personal lives — and how we can use different techniques to guard against the mental glitches that often get us into trouble. Thinking, fast and slow will transform the way you think about thinking. — Publisher’s promotion

Two types of thinking

System 1, intuitive, fast — operates with little or no effort.
System 2, slow — requires mental effort, includes complex computations, concentration.

Expert opinion

The quality of expert opinion is related to the amount of chaos in the expert’s environment. The more stable environment, the better chance for quality information.

An “expert” on long-term impact of the stock market is not as reliable because the stock market increases in complexity as the focus moves from micro to daily, weekly, yearly, century.

Confusing “knowing” and “thinking”

You may hear people say, “They knew the economy would plummet in 2008.” Before the economic decline, some experts “thought” a recession was coming. Others “thought” the economy would continue to grow.

We “know” after the event. We “think” before the event.

More to come.