Daniel Kahneman Quotes

However, optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts and among organizations, creates powerful forces that favor a collective blindness to risk and uncertainty.

A general “law of least effort” applies to cognitive as well as physical
exertion. The law asserts that if there are several ways of achieving the
same goal, people will eventually gravitate to the least demanding course
of action. In the economy of action, effort is a cost, and the acquisition of
skill is driven by the balance of benefits and costs. Laziness is built deep into our nature.

Mood evidently affects the operation of System 1: when we are uncomfortable and unhappy, we lose touch with our intuition.

Causally, noise is nowhere; statistically, it is everywhere.

The often-used phrase “pay attention” is apt: you dispose of a limited budget of attention that you can allocate to activities, and if you try to you try to go beyond your budget, you will fail.

The world in our heads is not a precise replica of reality; our expectations about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed.

Finally, the illusions of validity and skill are supported by a powerful professional culture. We know that people can maintain an unshakable faith in any proposition, however absurd, when they are sustained by a community of like-minded believers. Given the professional culture of the financial community, it is not surprising that large numbers of individuals in that world believe themselves to be among the chosen few who can do what they believe others cannot.

Loss aversion is a powerful conservative force that favors minimal changes from the status quo

The worse the consequence, the greater the hindsight bias.

Highly intelligent women tend to marry men who are less intelligent than they are.

The mystery is how a [theory] that is vulnerable to such obvious counterexamples survived for so long. I can explain it only by a weakness of the scholarly mind that I have often observed in myself. I call it theory-induced blindness: once you have accepted a theory and used it as a tool in your thinking, it is extraordinarily difficult to notice its flaws. If you come upon an observation that does not seem to fit the model, you assume that there must be a perfectly good explanation that you are somehow missing. You give the theory the benefit of the doubt, trusting the community of experts who have accepted it. Many scholars have surely thought at one time or another of stories such as [the above examples], and casually noted that these stories did not jibe with utility theory. But they did not pursue the idea to the point of saying, “This theory is seriously wrong because it ignores the fact that utility depends on the history of one’s wealth, not only on present wealth.” As the psychologist Daniel Gilbert observed, disbelieving is hard work, and System 2 is easily tired.

The confidence that individuals have in their beliefs depends mostly on the quality of the story they can tell about what they see, even if they see little.

The gorilla study illustrates two important facts about our minds: we can be blind to the obvious, and we are also blind to our blindness.

To derive the most useful information from multiple sources of evidence, you should always try to make these sources independent of each other.

Caring for people often takes the form of concern for the quality of their stories, not for their feelings. Indeed, we can be deeply moved even by events that change the stories of people already dead. We feel pity for a man who died believing in his wife’s love for him when we hear that she had a lover for many years and stayed with her husband only for his money. We pity the husband although he had lived a happy life. We feel the humiliation of a scientist who made a discovery that was proved false after she died, although she did not feel the humiliation. Most important, we all care intensely for the narrative of our own life and very much want it to be a good story, with a decent hero.