From dealing with uncertainty, decision making, understanding and recognising your and public stupidity, negotiation, using intuition, defining losses, the difference between probability and possibility, controlling emotion while reasoning – this book has it all. Take your time in chewing on this.
Probably the best book in psychology that I will ever have read.
The Insider
  • Animals have more real pain than people, but complain a lot lesser.
  • It is possible to compel yourself to be brave, until bravery becomes a habit.
  • You can love people without loving social norms.
  • People usually pay enormous prices to avoid mild embarrassment.
  • The nice thing about things that are urgent is that  if you wait long enough, they aren’t urgent anymore 😉
  • The only trouble with philosophy is that it doesn’t play by the rules of science.
  • Contrary to our belief, the big choices we make in our lives are usually random. The small choices probably tell us more about who we are. Your career may largely depend on which school teacher made lasting impressions. Who you marry could simply be a result of who was available at that time. Unlike these, small decisions are vey systematic.
  • The absence of feature itself is a feature.
  • By changing the context in which two things are compared, you submerge certain features and force others to the surface. A banana and an apple seem more similar than otherwise they would simply because we’ve agreed to call them both fruit. The mere act of classification re-inforces stereotypes. If you want to weaken some stereotype, eliminate the classification.
 
Errors
  • It is really funny for it to be so hard to only do what you want to do.
  • To understand memory, you don’t study memory. You study forgetting.
  • Reforms always create winners and losers, and the losers will always fight harder than the winners.
  • Education simply isn’t knowing stuff, its knowing what to do when you don’t know something.
 
The Collision
  • When people calculate the odds of a situation, they do not carry out advanced statistics, but they behave and take decisions as if they did.
  • People don’t think much about thinking.
  • When people become attached to a theory, they fit evidence to a theory and not theory to the evidence.
  • You have to will yourself to be an optimist even if you are’nt one because pessimism is stupid. When you are a pessimist and bad things happen, you live it twice.
  • Even the fairest coin, however, given the limitation of its memory and moral sense, cannot be as fair as the gambler expects it to be.
  • Peoples intuitive expectations are governed by a consistent misrepresentation of the world.
The Mind’s Rules
  • People often say they are doing one thing when they actually are doing another.
  • When presented with duplicates of the same data, every doctor has contradicted himself and rendered more than one diagnosis. Doctors apparently can’t even agree with themselves.
  • Diagnostic agreement in clinical medicine may not be much greater that that found in clinical psychology.
  • If you want to know whether you have cancer or not, you are actually better off using algorithms to study the X-Ray rather than asking the radiologist.
  • You can beat the doctor by replacing him with an equation created by people who know nothing about medicine and had simply asked the right questions from a few doctors.
  • The Model-of-Man is most likely to beat Man.
  • People are not so complicated, but the relationships between people, oh well thats in another trajectory.
  • The way the creative process works is that you first say something, and later, you understand what you said.
  • Work should be play. If it isn’t fun, there simply isn’t a point in doing it for reasons other than economic sustenance.
  • Those who cannot remember the past are condemned to repeat it.
The Rules of Prediction
  • Unless you are kicking yourself once in a month for throwing something away, you aren’t throwing enough away.
  • Base rates are what you would predict if you had no information at all.
  • We are exposed to a lifetime schedule in which we are most often rewarded for punishing others and punished for rewarding.
  • More advances in science come from, “hmmm that’s funny”, than eureka moments.
  • It’s amazing how dull history books are given that so much of whats in them is invented.
  • “He who sees the past as surprise free, is bound to have a future full of surprises.”
Going Viral
  • Hospitals aren’t just a place of treatment but also a machine for coping with uncertainty.
  • More people die in hospitals every year as a result of preventable accidents than in car accidents.
  • Eighty % of the doctors don’t think that probabilities apply to their patients, just like 95% of the married people don’t believe in the 50% divorce rate.
  • One can never be completely certain about anything, and for that matter why should anyone be ?
  • Mind and temperament are equally important.
  • People think acknowledging uncertainty, is admitting error, when on the contrary its the single most efficient tool to beat error.
  • In math you always check your work. In medicine, no.  If we are fallible in algebra, where the answers are clear, how much more fallible must we be in a world where the answer are much less clear.
  • Doctors behave differently when a they are offered a single gamble and when they are offered the same gamble repeatedly.
  • It is sometimes much easier to make the world a better place than to prove to have made the world a better place.
  • The secret to good research is always to be a little underemployed. You waste years by not being able to waste hours.
  • There are huge gaps between what people think makes them happy and what actually makes them happy.
  • PEAK END RULE – people preferred to endure more total pain so long as the experience ended on a more pleasant note. ( slowly booking losses )
  • Last impressions can be lasting impressions.
The Warrior Psychologist
  • Evaluate decisions not just on the outcome whether it turned out to be right or wrong – but by the process that led to it.
  • The job of the decision makes is not to be right but to figure out the odds in any decision and play them well.
  • Not every judgement is followed by a decision, but every decision implies some judgement.
  • For funny reasons, gamblers accept bets with negative expected values, if they didn’t, casinos wouldn’t exist.
  • People don’t maximise value, they maximise utility.
  • The more money one has, the less value he has to each additional increment, i.e the utility of each additional dollar diminishes with and increase in capital.
 
The Isolation Effect
  • Why are investors so reluctant to sell stocks that have fallen in value, even when they admitted that they would never buy those stocks at current market prices?
  • The idea of profit or loss seems to be larger that the actual profit or loss itself.
  • People seem to choose more between the description of things, rather than the things themselves.
  • When you frame sure things
    •  as a gain people choose certainty
    • as a loss they choose to gamble.
  • The reference point though simply just a state of mind, can completely convert a gain into loss and vice versa. The choices people make can simply be manipulated by the way they are described.
    • If a wall street trader was to be paid a bonus of 1 million $ and is paid only 0.5 million $ he experiences a sense of loss.
    • Again if the same trader expected to be paid a 1 million $ bonus and expected the rest of the company employees to be paid 1 million $, and ended up getting paid 1 mil $ but the rest got 2 mil $, again he is back to the domain of losses.
  • Loss is simply winding up worse than your reference point.
  • People respond to changes rather than absolute levels.
  • People approach risk very differently when it involves losses than when it involved gains.
  • People do not respond to probability in a straight forward manner.
  • People pay through their nose for certainty, as they respond to probability not just with reason, but with emotion.
  • Every emotion, becomes stronger as the odds become more remote. ( Lottery tickets & Insurance premiums )
  • Due to emotion, people begin to treat remote probabilities as if they were possibilities.
The Rules of Undoing
  • Studying natural stupidity can probably be more rewarding than studying artificial intelligence.
  • People undo reality by simply creating alternative reality.
  • When you create an alternative reality, it could lead to frustration. This frustration varies on the proximity to the actual reality.
  • Reality is a cloud of possibility. It is not a point
  • People are blind to logic when it is embedded into a story.
  • Any prediction can be made to seem more believable, even when it becomes less likely, if it was filled with internally consistent details.
  • Economists are brash and self-assured. Psychologists are nuanced and doubtful.
  • Psychologists think economists are immoral and economists think psychologists a re stupid.

quote-money-does-not-buy-you-happiness-but-lack-of-money-certainly-buys-you-misery-daniel-kahneman-47-27-05

danny-and-amos

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2 replies on “The Undoing Project – Michael Lewis undoes Danny Kahneman and Amos Tversky

  1. Outstanding work. Taking notes and representing is also an art and its what is required to take the gist of a book to masses

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