Reaction Paper on Decision Making Text Bok Essay Example

"fast thinking," functions intuitively and unconsciously without requiring intentional control or direction. Conversely, the second system known as "slow thinking" necessitates conscious deliberation, employs logical reasoning and demands substantial effort.

Identifying anger in a person's photo does not necessitate intentional effort. It occurs immediately and instinctively, exhibiting rapid cognition akin to system 1. Conversely, addressing a multiplication task such as multiplying 17 by 25 demands mindful focus and deliberate endeavor. Without this dedication, the solution cannot be achieved, highlighting the use of system 2. System 1 has evolved over time in response to environmental adaptation, while system 2 is an exclusive feature of humans.

Our self-specific system comprises two elements: a conscious and logical part that handles beliefs, selections, and conclusions. Even though it might seem like this latter element is accountable for most of our decisions, in reality, it's the former part that predominantly governs our life. This is due to the fact that we encounter countless choices daily, rendering reliance on the latter part unfeasible. Logical decision-making demands time for examination and deduction which require energy and exertion. Consequently, we rarely employ the second system.

Typically, System 1 provides recommendations to System 2 without altering anything. If there is a delay in reaction or an error is identified, it's the responsibility of System 2 to step in. For instance, when confronted with a challenging scenario, two blocks are created for System 1 by the control mechanism. However, studies suggest that if someone struggles with a problem requiring both systems, their self-discipline often deteriorates and they become more prone to succumbing to temptation.

System 1 reveals cognitive errors that frequently

result in the adoption of incorrect decisions. In his recent publication, "Thinking Fast and Slow," Doctor Daniel Kahneman presents a range of these thought errors. His objective is to assist individuals in recognizing and comprehending their own decision-making processes. System 1 remains active constantly (unlike system 2, which necessitates conscious effort), thereby making individuals more susceptible to cognitive errors. An illustration of system 1's autonomy is the Muller-Lyer optical illusion, where two parallel lines appear to differ in length.

Even if we measure the two lines and convince ourselves (with the help of the two) that their length is the same, system 1 will still perceive them as unequal. Similar to optical illusions, cognitive illusions are challenging to overcome, but the first step to breaking free from their dominance is recognizing their existence. In times of crisis and uncertain situations, decisions are made by system 1, making it crucial to be aware of its limitations. It is important to comprehend that not everyone is influenced by the weaknesses of system 1.

Kahneman's simple test, as an example, clearly depicts this. He frequently asks, "If a baseball bat and ball together cost $1.10, and the bat costs one dollar more than the ball, what is the price of the ball?". Surprisingly enough, over half of highly intellectual students from esteemed establishments such as Harvard and Princeton mistakenly answer 10 cents at first glance. The actual answer should be 5 cents. This demonstrates one of the most prevalent cognitive mistakes known as "the overconfidence bias", which alludes to an individual's propensity to overly trust their capabilities.

Statistics indicate that roughly 35% of American startups

manage to stay operational for a period of five years. Despite this, research among business founders indicates they generally believe that about 60% of new companies will be successful and estimate an 81% chance of success for their own enterprise. Kahneman proposes the idea that optimism is the driving force behind capitalism, a theory which is backed by the prevalence of positive outlooks and daring actions among those in positions of leadership or innovation, who significantly influence numerous individuals' lives with their strong conviction in their potential for accomplishment.

Kahneman recognised a cognitive mistake named "the planning fallacy", which is an error in estimating during planning. This issue was initially discovered by psychologists in 1970 when the Israel Ministry of Education asked Kahneman to develop both a handbook and curriculum on decision making. To accomplish this, Kahneman assembled a group of experts, including one who specialized in program design. After working for a year, his peers asked the team to predict how much additional time they thought was needed.

Most project predictions estimated completion in roughly two years, with a six-month margin of error. Yet, an expert disclosed that the typical duration for such projects extended to 7-10 years and only 40% were finished. Despite this knowledge, the same specialist projected another two-year timeline for the particular project. Astonishingly, it took eight years to complete the project while the Ministry of Education remained indifferent. Another example of planning miscalculations is seen in America; a survey among homeowners indicated an average predicted spend of $18,500 on kitchen renovations. In reality, however, the average expense was $39,000. Scotland provides an even more drastic instance where

initial cost projections for a new Parliament building in 1997 was ?40 million but by its completion in 2004 soared to ?431 million. Kahneman also highlights another cognitive bias called "the availability bias", which refers to forming judgments based on readily available information.

Studies reveal that Americans perceive the probability of dying from a disastrous accident to be 300 times higher than death by diabetes, notwithstanding the fact that the real odds are 4:1. Kahneman suggests this demonstrates how our perception of risk can be manipulated by media exposure, which could detrimentally affect our lives. Following the tragic events on September 11th, research displayed an increased preference among Americans for long-distance road travel as opposed to flying. This is despite nearly 1,500 people losing their lives in car accidents during that year - indicating a potential underappreciation of driving hazards compared to terrorism.

"The anchor effect" is the term used to describe a prominent cognitive mistake known as anchoring. A fascinating example of this mental shortcut was demonstrated in an experiment involving a chosen group of German judges with over 15 years' experience. In the study, these judges were given details about a case where the defendant was caught shoplifting. In order to establish an apt punishment, they had to roll two dice that had been rigged to display only totals of either 3 or 9. Following this, it became their responsibility to decide on a fitting penalty for the offender.

Contrary to the prevailing belief that seasoned experts should not let dice rolls dictate their actions, studies have revealed that when nine justices rolled a combined total of 12 on their

dice, they typically handed down a jail sentence of eight months. On the other hand, if they accumulated a score of 3, the average incarceration term meted out was five months. This type of controllable error is routinely harnessed in commerce to skew customers' pricing expectations. For instance, businesses may exhibit three distinct variations of identical service at varying prices, rendering the most affordable option appear more appealing against its pricier alternatives which would otherwise be perceived as the sole available selection.

Auctions commonly set a starting price for the same purpose. Moreover, an inherent characteristic of system 1 is its tendency to offer an uncomplicated response to complex questions unknowingly. Professor Kahneman exemplifies this with a research conducted on German students who were questioned, "How content are you?" and "What was the count of your romantic experiences last month?". The sequence of these questions was reversed for some students.

At the beginning, no apparent connection can be seen in the responses given. However, later on, a significant relationship emerges between how often social events are attended and students' declared joyfulness. Professor Kahneman clarifies that answering "How happy are you?" necessitates deeper reflection. In contrast, when questioned about their romantic life, students didn't require as much contemplation because they substituted their answer with the response to a different question - "how satisfied am I with my romantic life?".

Dr. Kahneman notes that students understand their romantic relationships are not their only priority, however, they find comfort in the simplistic answer provided by system 1. He emphasizes the significant role memories have in our happiness. Humans possess two distinct selves - the experiencing

and remembering self, with most individuals being influenced more by their remembering self. To demonstrate this point, Dr. Kahneman asks: would you be open to purchasing a phenomenal holiday experience if it meant you'd have to drink a concoction that eliminates all recollections of your vacation, including any captured photos or videos?

Likely not. Kahneman clarifies the difference between experiences and memories by retelling a dialogue he had with an attendee after his talk. The individual recounted a tale about enjoying an enthralling symphony, only for the experience to be spoiled by a loud sound at the conclusion caused by a damaged disc. The person expressed sorrow that "the finale ruined my listening experience." Kahneman pointed out that although this may have impacted their memory of it, they still spent 20 minutes relishing in the actual experience.

The confusion of two issues is a cognitive error that can have unpleasant consequences. In an experiment, volunteers were subjected to two painful experiences. They were then asked to choose one to be repeated. Surprisingly, they chose the most painful experience overall, even though it lasted longer but ended with less intense pain. This decision was influenced by the positive memory it left. According to Kahneman, when planning our activities, we tend to prioritize the voice of our past experiences. Instead of considering how we will feel and for how long, we focus on the living memory that will remain. This phenomenon is known as "the tyranny of memory self."

Refferences

1. http://en. wikipedia. org/wiki/Thinking,_Fast_and_Slow http://www. nytimes. com/2011/11/27/books/review/thinking-fast-and-slow-by-daniel-kahneman-book-review. html? _r=0
2. http://whytoread. com/why-to-read-thinking-fast-and-slow-by-daniel-kahneman/ http://www. findingtheworld. com/the-secrets-of-the-human-brain-two-mechanisms-that-control-our-lives/