> [!INFO] Book Application > [[Thinking, Fast and Slow Application]] ## Highlights The question that the executive faced (should I invest in Ford stock?) was difficult, but the answer to an easier and related question (do I like Ford cars?) came readily to his mind and determined his choice. This is the essence of intuitive heuristics: when faced with a difficult question, we often answer an easier one instead, usually without noticing the substitution. ([View Highlight](https://read.readwise.io/read/01j2vwnr8rhqparh8c37e5gd1f)) - 💭 The reason for bias “The situation has provided a cue; this cue has given the expert access to information stored in memory, and the information provides the answer. Intuition is nothing more and nothing less than recognition.” ([View Highlight](https://read.readwise.io/read/01j2vwj9dd2qkrbp5ca1p4vkvv)) ^sgystm - 💭 also sounds similar to how habits are formed, which explains why they shortcut the decision making process - it becomes intuition One of the tasks of System 2 is to overcome the impulses of System 1. In other words, System 2 is in charge of self-control. ([View Highlight](https://read.readwise.io/read/01j2vx7kfy2dpkn0wpc80w1q2y)) ^6ao21g Even when cues to likely errors are available, errors can be prevented only by the enhanced monitoring and effortful activity of System 2. ([View Highlight](https://read.readwise.io/read/01j2vxagxnsp2207ytxgm08dph)) ^e7996v - 💭 is a pkm system the representation of system 2? a way that is more tangible to help us access that part of our brain processes? The mind—especially System 1—appears to have a special aptitude for the construction and interpretation of stories about active agents, who have personalities, habits, and abilities. You quickly formed a bad opinion of the thieving butler, you expect more bad behavior from him, and you will remember him for a while. This is also my hope for the language of systems. ([View Highlight](https://read.readwise.io/read/01j2vxfkss29at0svx81t6k2ky)) ^4i5iun - 💭 storytelling and world building is effective because of system 1 System 2 is the only one that can follow rules, compare objects on several attributes, and make deliberate choices between options. The automatic System 1 does not have these capabilities. ([View Highlight](https://read.readwise.io/read/01j2vxx4h082rrbhpq9yq6sgr4)) ^cn4fa1 System 1 detects simple relations (“they are all alike,” “the son is much taller than the father”) and excels at integrating information about one thing, but it does not deal with multiple distinct topics at once, nor is it adept at using purely statistical information. ([View Highlight](https://read.readwise.io/read/01j2vxxsmyf2psqzq4ssw7bc3g)) ^cnq458 Flow neatly separates the two forms of effort: concentration on the task and the deliberate control of attention. Riding a motorcycle at 150 miles an hour and playing a competitive game of chess are certainly very effortful. In a state of flow, however, maintaining focused attention on these absorbing activities requires no exertion of self-control, thereby freeing resources to be directed to the task at hand. ([View Highlight](https://read.readwise.io/read/01j2vy5nc8ta9g0p1c5khx1bdf)) ^gxqjcf - 💭 this is why flow might be more appealing for people who are neurodiverse and are lacking a larger working memory, because it helps them achieve something similar with their own biological limitations Baumeister’s group has repeatedly found that an effort of will or self-control is tiring; if you have had to force yourself to do something, you are less willing or less able to exert self-control when the next challenge comes around. The phenomenon has been named ego depletion. ([View Highlight](https://read.readwise.io/read/01j2vy95t4w9fpgr3eh59fxa2b)) ^otw3g5 - 💭 this is willpower? The nervous system consumes more glucose than most other parts of the body, and effortful mental activity appears to be especially expensive in the currency of glucose. When you are actively involved in difficult cognitive reasoning or engaged in a task that requires self-control, your blood glucose level drops. The effect is analogous to a runner who draws down glucose stored in her muscles during a sprint. The bold implication of this idea is that the effects of ego depletion could be undone by ingesting glucose, and Baumeister and his colleagues have confirmed this hypothesis in several experiments. ([View Highlight](https://read.readwise.io/read/01j2vyb7aw3ttdg92j41hcetng)) ^kj8333 ### New highlights added July 17, 2024 at 12:56 AM An odd feature of what happened is that your System 1 treated the mere conjunction of two words as representations of reality. Your body reacted in an attenuated replica of a reaction to the real thing, and the emotional response and physical recoil were part of the interpretation of the event. As cognitive scientists have emphasized in recent years, cognition is embodied; you think with your body, not only with your brain. ([View Highlight](https://read.readwise.io/read/01j2ynbdqv10rzv33cz8mstt22)) Psychologists think of ideas as nodes in a vast network, called associative memory, in which each idea is linked to many others. There are different types of links: causes are linked to their effects (virus  cold); things to their properties (lime  green); things to the categories to which they belong (banana  fruit). One way we have advanced beyond Hume is that we no longer think of the mind as going through a sequence of conscious ideas, one at a time. In the current view of how associative memory works, a great deal happens at once. An idea that has been activated does not merely evoke one other idea. It activates many ideas, which in turn activate others. Furthermore, only a few of the activated ideas will register in consciousness; most of the work of associative thinking is silent, hidden from our conscious selves. ([View Highlight](https://read.readwise.io/read/01j2ynd5dm6hcmaaxra9ry389n)) ^89djv2 - 💭 this is how second brains parallel the way our brain primarily does Priming effects take many forms. If the idea of EAT is currently on your mind (whether or not you are conscious of it), you will be quicker than usual to recognize the word SOUP when it is spoken in a whisper or presented in a blurry font. And of course you are primed not only for the idea of soup but also for a multitude of food-related ideas, including fork, hungry, fat, diet, and cookie. ([View Highlight](https://read.readwise.io/read/01j2yng8pygqkyh2ycb2wk40cf)) ^wheaiy - 💭 one of effects of having an associative network. why our environment is important in shaping how we think, as it filters what cues we have Like ripples on a pond, activation spreads through a small part of the vast network of associated ideas. The mapping of these ripples is now one of the most exciting pursuits in psychological research. ([View Highlight](https://read.readwise.io/read/01j2ynhxzates1xatk790zd2zx)) ^t8gths - 💭 continues to search for relevant ideas As Bargh had predicted, the young people who had fashioned a sentence from words with an elderly theme walked down the hallway significantly more slowly than the others. ([View Highlight](https://read.readwise.io/read/01j2ynktkch2mc2rwhqwdf7wwt)) ^nh5a8w - 💭 is this why people find value in affirmations and manifestation? This remarkable priming phenomenon—the influencing of an action by the idea—is known as the ideomotor effect. ([View Highlight](https://read.readwise.io/read/01j2ynndyf45tnw1mep4c6m5cy)) ^4edk1x Reciprocal links are common in the associative network. For example, being amused tends to make you smile, and smiling tends to make you feel amused. ([View Highlight](https://read.readwise.io/read/01j2ynpthv2xea722qyq503n4t)) ^a0hgxp In another experiment, people whose face was shaped into a frown (by squeezing their eyebrows together) reported an enhanced emotional response to upsetting pictures—starving children, people arguing, maimed accident victims. ([View Highlight](https://read.readwise.io/read/01j2ynr21yhekft7fn9ghye5tp)) ^1dwlao - 💭 this is what embodied thinking means - we can use our body to help us feel more ### New highlights added July 19, 2024 at 2:25 PM The various causes of ease or strain have interchangeable effects. When you are in a state of cognitive ease, you are probably in a good mood, like what you see, believe what you hear, trust your intuitions, and feel that the current situation is comfortably familiar. You are also likely to be relatively casual and superficial in your thinking. When you feel strained, you are more likely to be vigilant and suspicious, invest more effort in what you are doing, feel less comfortable, and make fewer errors, but you also are less intuitive and less creative than usual. ([View Highlight](https://read.readwise.io/read/01j3662scy7sef0ahnqk48kdaw)) ^e410ad performance was better with the bad font. Cognitive strain, whatever its source, mobilizes System 2, which is more likely to reject the intuitive answer suggested by System 1. ([View Highlight](https://read.readwise.io/read/01j3667y5haes06g64n297smj0)) ^oly1cx - 💭 this would also apply to persuasion in videos and critical thinking in reading QWEQWE 1 System 1: when we are uncomfortable and unhappy, we lose touch with our intuition. These findings add to the growing evidence that good mood, intuition, creativity, gullibility, and increased reliance on System 1 form a cluster. ([View Highlight](https://read.readwise.io/read/01j366hkgdna7jf3gatv95mee8)) ^d6p7ny - 💭 growth needs require us to work from a place of enjoyment so we can best listen to ourselves? the other pole, sadness, vigilance, suspicion, an analytic approach, and increased effort also go together. A happy mood loosens the control of System 2 over performance ([View Highlight](https://read.readwise.io/read/01j366m1r31heb7as9e1chdmvs)) ^zseg8z - 💭 reminds me of inner game of tennis System 1 does not keep track of alternatives that it rejects, or even of the fact that there were alternatives. Conscious doubt is not in the repertoire of System 1; it requires maintaining incompatible interpretations in mind at the same time, which demands mental effort. Uncertainty and doubt are the domain of System 2. ([View Highlight](https://read.readwise.io/read/01j36bj5zpe2a2aazm49q91yks)) ^h96h4v - 💭 lack of friction in choice because it isolates whatever was most salient? hence causing jumping to conclusions? System 2 is in charge of doubting and unbelieving, but System 2 is sometimes busy, and often lazy. Indeed, there is evidence that people are more likely to be influenced by empty persuasive messages, such as commercials, when they are tired and depleted. ([View Highlight](https://read.readwise.io/read/01j36bnbf5xwxsb0yhz0ke9vjk)) ^t37i8m - 💭 this is why sales tries to focus on feelings not facts ### New highlights added July 20, 2024 at 12:24 AM You meet a woman named Joan at a party and find her personable and easy to talk to. Now her name comes up as someone who could be asked to contribute to a charity. What do you know about Joan’s generosity? The correct answer is that you know virtually nothing, because there is little reason to believe that people who are agreeable in social situations are also generous contributors to charities. But you like Joan and you will retrieve the feeling of liking her when you think of her. You also like generosity and generous people. By association, you are now predisposed to believe that Joan is generous. And now that you believe she is generous, you probably like Joan even better than you did earlier, because you have added generosity to her pleasant attributes. ([View Highlight](https://read.readwise.io/read/01j36wmxwqne9d2vk3807pznwv)) ^ak4rm2 - 💭 maybe this is how idealization and and infatuation happens? An essential design feature of the associative machine is that it represents only activated ideas. Information that is not retrieved (even unconsciously) from memory might as well not exist. System 1 excels at constructing the best possible story that incorporates ideas currently activated, but it does not (cannot) allow for information it does not have. ([View Highlight](https://read.readwise.io/read/01j36wt3gxxs4a3jpp5sdtyhra)) ^clxm4z - 💭 why you need the global workspace theory for creativity, to have a larger space to play with a set of ideas It is the consistency of the information that matters for a good story, not its completeness. Indeed, you will often find that knowing little makes it easier to fit everything you know into a coherent pattern. ([View Highlight](https://read.readwise.io/read/01j36zmmgsvb60p8jrhvm5g6kk)) ^bs1dny - 💭 why biased perspectives can be more compelling than ones that look at both sides . It is impossible to aim at a single point with a shotgun because it shoots pellets that scatter, and it seems almost equally difficult for System 1 not to do more than System 2 charges it to do. ([View Highlight](https://read.readwise.io/read/01j370f2rpj8wp8seat7j4ktgb)) ^ct0t2k In both cases, satisfaction in the particular domain dominates happiness reports. Any emotionally significant question that alters a person’s mood will have the same effect. WYSIATI. The present state of mind looms very large when people evaluate their happiness. ([View Highlight](https://read.readwise.io/read/01j370wmz3506t5m7e8dt2jgaa)) ^dhk8zb - 💭 that's why marketers try to make you associate positive feelings with the product they are advertising, it's easy to make connection and be primed to feel that way ### New highlights added July 20, 2024 at 1:26 PM Characteristics of System 1 • generates impressions, feelings, and inclinations; when endorsed by System 2 these become beliefs, attitudes, and intentions • operates automatically and quickly, with little or no effort, and no sense of voluntary control • can be programmed by System 2 to mobilize attention when a particular pattern is detected (search) • executes skilled responses and generates skilled intuitions, after adequate training • creates a coherent pattern of activated ideas in associative memory • links a sense of cognitive ease to illusions of truth, pleasant feelings, and reduced vigilance • distinguishes the surprising from the normal • infers and invents causes and intentions • neglects ambiguity and suppresses doubt • is biased to believe and confirm • exaggerates emotional consistency (halo effect) • focuses on existing evidence and ignores absent evidence (WYSIATI) • generates a limited set of basic assessments • represents sets by norms and prototypes, does not integrate • matches intensities across scales (e.g., size to loudness) • computes more than intended (mental shotgun) • sometimes substitutes an easier question for a difficult one (heuristics) • is more sensitive to changes than to states (prospect theory)[*](https://readwise.io/reader/document_raw_content/35917987/#filepos1526535) • overweights low probabilities[*](https://readwise.io/reader/document_raw_content/35917987/#filepos1526709) • shows diminishing sensitivity to quantity (psychophysics)[*](https://readwise.io/reader/document_raw_content/35917987/#filepos1526883) • responds more strongly to losses than to gains (loss aversion)[*](https://readwise.io/reader/document_raw_content/35917987/#filepos1527057) • frames decision problems narrowly, in isolation from one another[*](https://readwise.io/reader/document_raw_content/35917987/#filepos1527231) ([View Highlight](https://read.readwise.io/read/01j38r7cnb939x9zh280e2r09s)) ^02uac7 The exaggerated faith in small samples is only one example of a more general illusion—we pay more attention to the content of messages than to information about their reliability, and as a result end up with a view of the world around us that is simpler and more coherent than the data justify. Jumping to conclusions is a safer sport in the world of our imagination than it is in reality. ([View Highlight](https://read.readwise.io/read/01j38t2jb08gth5q3g0fxntceh)) ^4f4v9p - 💭 marketing - survivorship bias for testimonials, coherence through persuasion and story rather than critically thinking on whether its true A process that resembles suggestion is indeed at work in many situations: System 1 tries its best to construct a world in which the anchor is the true number. This is one of the manifestations of associative coherence that I described in the first part of the book. ([View Highlight](https://read.readwise.io/read/01j38tgzs2xm04sdzvczxj1h0s)) - 💭 priming System 2 works on data that is retrieved from memory, in an automatic and involuntary operation of System 1. System 2 is therefore susceptible to the biasing influence of anchors that make some information easier to retrieve. Furthermore, System 2 has no control over the effect and no knowledge of it. ([View Highlight](https://read.readwise.io/read/01j38tx82sprgkaj124cg0e0wx)) ^f77ccq - 💭 how does one be more aware on when they are being anchored? However, you should assume that any number that is on the table has had an anchoring effect on you, and if the stakes are high you should mobilize yourself (your System 2) to combat the effect. ([View Highlight](https://read.readwise.io/read/01j38tzkmhhy1j87paaf1jd9hh)) ^xqwb6y - 💭 time to be paranoid 💀 so then the key is awareness and having it in the back of the mind before making a decision to try and think of any plausible ways it has affected you As predicted, participants whose experience of fluency was “explained” did not use it as a heuristic; the subjects who were told that music would make retrieval more difficult rated themselves as equally assertive when they retrieved twelve instances as when they retrieved six. ([View Highlight](https://read.readwise.io/read/01j38vds0239g20fk1nzym3wgy)) ^pjv8d0 - 💭 availability bias is no longer paradoxical, meaning that if you were to list the benefits of a game but then no longer are interested in the game as much, is affected by the level we are surprised by our results in recalling such information traditionally we would view our friction of recalling points to influence our confidence in the belief we are holding, but if it is offloaded or explained with something like music intentionally hindering this process, then we are not going to attribute it to ourselves system to rationalizes the takeaways of system one finding this causation ### New highlights added July 21, 2024 at 2:24 PM Damasio and his colleagues have observed that people who do not display the appropriate emotions before they decide, sometimes because of brain damage, also have an impaired ability to make good decisions. ([View Highlight](https://read.readwise.io/read/01j3bdfqgtweye588vqc6chs2s)) ^k7hbmd - 💭 reminds me of interoception gut feeling in extended mind the amount of concern is not adequately sensitive to the probability of harm; you are imagining the numerator—the tragic story you saw on the news—and not thinking about the denominator. Sunstein has coined the phrase “probability neglect” to describe the pattern. ([View Highlight](https://read.readwise.io/read/01j3bdvk2e3snq7qtndj2epd2r)) ^8l5gxs - 💭 on irrationally fearing things that statistically are not probable but are salient because of availability bias In other situations, the stereotypes are false and the representativeness heuristic will mislead, especially if it causes people to neglect base-rate information that points in another direction. Even when the heuristic has some validity, exclusive reliance on it is associated with grave sins against statistical logic. ([View Highlight](https://read.readwise.io/read/01j3becat60vagjfq4ck3j6tab)) ^7tl4c6 - 💭 always consider whether or could be a fundamental probability a statistic that might influence your initial stereotype There is one thing you can do when you have doubts about the quality of the evidence: let your judgments of probability stay close to the base rate. ([View Highlight](https://read.readwise.io/read/01j3bepbveenc0cg1fxzmtt8b1)) ^31a6fh - 💭 this is objective truth, then you can slightly gamble with your speculation reminds me of investing where he can have most of it in a traditionally secure stock ETF, and only have a tiny bit for speculation ### New highlights added July 23, 2024 at 7:09 PM Statistical results with a causal interpretation have a stronger effect on our thinking than noncausal information. But even compelling causal statistics will not change long-held beliefs or beliefs rooted in personal experience. On the other hand, surprising individual cases have a powerful impact and are a more effective tool for teaching psychology because the incongruity must be resolved and embedded in a causal story. That is why this book contains questions that are addressed personally to the reader. You are more likely to learn something by finding surprises in your own behavior than by hearing surprising facts about people in general. ([View Highlight](https://read.readwise.io/read/01j3gqgsjvg3hce5tyfnadgv4c)) ### New highlights added July 27, 2024 at 2:29 PM It took Francis Galton several years to figure out that correlation and regression are not two concepts—they are different perspectives on the same concept. The general rule is straightforward but has surprising consequences: whenever the correlation between two scores is imperfect, there will be regression to the mean. ([View Highlight](https://read.readwise.io/read/01j3ty156meyxpyearxzcpnzfj)) ^97mjby - 💭 this is because luck also has a factor ### New highlights added July 29, 2024 at 2:39 PM Finally, the participants report the opinion they held beforehand. This task turns out to be surprisingly difficult. Asked to reconstruct their former beliefs, people retrieve their current ones instead—an instance of substitution—and many cannot believe that they ever felt differently. Your inability to reconstruct past beliefs will inevitably cause you to underestimate the extent to which you were surprised by past events. ([View Highlight](https://read.readwise.io/read/01j4035j8grc0gd0khysw9yd77)) ^p0qjwo - 💭 is this because they didn't really think about their past opinions strongly and so they were more impressionable or is this because they genuinely did not have the capacity to embody their past opinion ### New highlights added July 30, 2024 at 2:58 PM On average, the gap in corporate profitability and stock returns between the outstanding firms and the less successful firms studied in Built to Last shrank to almost nothing in the period following the study. The average profitability of the companies identified in the famous In Search of Excellence dropped sharply as well within a short time. ([View Highlight](https://read.readwise.io/read/01j42khe1049nwc2aamqs5eqjj)) ^y4vpo8 - 💭 survivorship bias should not be used because of the natural regression to the mean, therefore we can't just only do what successful people are doing because a lot of non-successful people are probably also doing the same things Confidence is a feeling, which reflects the coherence of the information and the cognitive ease of processing it. It is wise to take admissions of uncertainty seriously, but declarations of high confidence mainly tell you that an individual has constructed a coherent story in his mind, not necessarily that the story is true. ([View Highlight](https://read.readwise.io/read/01j42kxeztc8q706a1m2r2f6mw)) ^ewxv6n The subjective experience of traders is that they are making sensible educated guesses in a situation of great uncertainty. In highly efficient markets, however, educated guesses are no more accurate than blind guesses. ([View Highlight](https://read.readwise.io/read/01j42m54p2m5fqf9h3jvv3fsvt)) ^gkos5n - 💭 just as good to not act on choices, and to follow the safer strategy of dca on an etf you believe in The experts performed worse than they would have if they had simply assigned equal probabilities to each of the three potential outcomes. In other words, people who spend their time, and earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options. Even in the region they knew best, experts were not significantly better than nonspecialists. ([View Highlight](https://read.readwise.io/read/01j42mgt7w9r314rw23mrw78aj)) ^mlcgel - 💭 what is to say about consulting where do they provide value then? just by telling people what they want to hear? Why are experts inferior to algorithms? One reason, which Meehl suspected, is that experts try to be clever, think outside the box, and consider complex combinations of features in making their predictions. Complexity may work in the odd case, but more often than not it reduces validity. Simple combinations of features are better. ([View Highlight](https://read.readwise.io/read/01j42n2b8t0k73g1kfsmj3bqam)) ^qe9vf8 - 💭 how long is it more convenient but it is also more accurate to only select the key few variables Because you have little direct knowledge of what goes on in your mind, you will never know that you might have made a different judgment or reached a different decision under very slightly different circumstances. Formulas do not suffer from such problems. Given the same input, they always return the same answer. When predictability is poor—which it is in most of the studies reviewed by Meehl and his followers—inconsistency is destructive of any predictive validity. ([View Highlight](https://read.readwise.io/read/01j42n83n70f82haps2py29k2g)) ^z51d8w - 💭 is there something we should actually get AI to do instead of ourselves? The big surprise to me was that the intuitive judgment that the interviewers summoned up in the “close your eyes” exercise also did very well, indeed just as well as the sum of the six specific ratings. I learned from this finding a lesson that I have never forgotten: intuition adds value even in the justly derided selection interview, but only after a disciplined collection of objective information and disciplined scoring of separate traits. I set a formula that gave the “close your eyes” evaluation the same weight as the sum of the six trait ratings. A more general lesson that I learned from this episode was do not simply trust intuitive judgment—your own or that of others—but do not dismiss it, either. ([View Highlight](https://read.readwise.io/read/01j42nw45880y7wrw5946zk51v)) - 💭 maybe leetcode isn't as bad since at least its standardized? it does follow a similar strategy, since the interviewer can leave comments Suppose that you need to hire a sales representative for your firm. If you are serious about hiring the best possible person for the job, this is what you should do. First, select a few traits that are ([View Highlight](https://read.readwise.io/read/01j42p22nh1ycydzrbaf09xzes)) ^3bewrx - 💭 think of prerequisites that are independent and create a rating scale for them think of objective ways to measure those metrics score each individually to prevent halo effect choose the highest scorer ### New highlights added August 5, 2024 at 11:23 AM Klein elaborated this description into a theory of decision making that he called the recognition-primed decision (RPD) model, which applies to firefighters but also describes expertise in other domains, including chess. The process involves both System 1 and System 2. In the first phase, a tentative plan comes to mind by an automatic function of associative memory—System 1. The next phase is a deliberate process in which the plan is mentally simulated to check if it will work—an operation of System 2. ([View Highlight](https://read.readwise.io/read/01j4hp4mn24hrtzg9exr8mb7zs)) ^rssqh5 - 💭 reminds me of the strategies used by competitive programmers as mentioned in one of those YouTubers use system one completely of an answer recent pattern matching, then you logically bring it to life and apply it through system two thinking I used to only be strong at systems one thinking but now I've been slowly practicing my rationale which I feel like can help me be more rounded very much If a strong predictive cue exists, human observers will find it, given a decent opportunity to do so. Statistical algorithms greatly outdo humans in noisy environments for two reasons: they are more likely than human judges to detect weakly valid cues and much more likely to maintain a modest level of accuracy by using such cues consistently. ([View Highlight](https://read.readwise.io/read/01j4hppk7y00pd5zmkw4848mbs)) ^5mibwa ### New highlights added August 7, 2024 at 12:59 AM If the environment is sufficiently regular and if the judge has had a chance to learn its regularities, the associative machinery will recognize situations and generate quick and accurate predictions and decisions. You can trust someone’s intuitions if these conditions are met. ([View Highlight](https://read.readwise.io/read/01j4m7zybvaejvsp8x3y24xjjd)) ^2thjfy The outside view is implemented by using a large database, which provides information on both plans and outcomes for hundreds of projects all over the world, and can be used to provide statistical information about the likely overruns of cost and time, and about the likely underperformance of projects of different types. ([View Highlight](https://read.readwise.io/read/01j4m99tx3cprmsdccd04am0b8)) ^dtv4k0 - 💭 if only people paying for courses and transformations could have this information accessible and prime to them The evidence suggests that an optimistic bias plays a role—sometimes the dominant role—whenever individuals or institutions voluntarily take on significant risks. More often than not, risk takers underestimate the odds they face, and do invest sufficient effort to find out what the odds are. Because they misread the risks, optimistic entrepreneurs often believe they are prudent, even when they are not. Their confidence in their future success sustains a positive mood that helps them obtain resources from others, raise the morale of their employees, and enhance their prospects of prevailing. When action is needed, optimism, even of the mildly delusional variety, may be a good thing. ([View Highlight](https://read.readwise.io/read/01j4m9sfxkyjm6rw33zxnbcwfa)) ^268mvf - 💭 does this fall into manifestation? what is the downside? ### New highlights added August 10, 2024 at 12:57 PM Evaluation is relative to a neutral reference point, which is sometimes referred to as an “adaptation level.” ([View Highlight](https://read.readwise.io/read/01j4yskgyhf40bqsa7641zhggm)) ^c1nun2 - 💭 awards and consequences are subjective to the persons context. prospect theory ### New highlights added September 4, 2024 at 5:24 PM Veteran traders have apparently learned to ask the correct question, which is “How much do I want to have that mug, compared with other things I could have instead?” This is the question that Econs ask, and with this question there is no endowment effect, because the asymmetry between the pleasure of getting and the pain of giving up is irrelevant. ([View Highlight](https://read.readwise.io/read/01j56dwwp4rf777tck4hpgq7pe)) They are willing to accept less than the expected value of a gamble to lock in a sure gain. ([View Highlight](https://read.readwise.io/read/01j56gxztxg8bteeqbpdt6mt7v)) Without a ticket you cannot win, with a ticket you have a chance, and whether the chance is tiny or merely small matters little. Of course, what people acquire with a ticket is more than a chance to win; it is the right to dream pleasantly of winning. ([View Highlight](https://read.readwise.io/read/01j56gxq9tb065mer0vwhwy0c2)) using physiological measures such as heart rate, that the fear of an impending electric shock was essentially uncorrelated with the probability of receiving the shock. The mere possibility of a shock triggered the full-blown fear response. ([View Highlight](https://read.readwise.io/read/01j58zfmjp9hr0zdt8g2szptav)) - 💭 prospect theory focuses on feelings rather than facts, utility theory is the opposite a rich and vivid representation of the outcome, whether or not it is emotional, reduces the role of probability in the evaluation of an uncertain prospect. This hypothesis suggests a prediction, in which I have reasonably high confidence: adding irrelevant but vivid details to a monetary outcome also disrupts calculation. ([View Highlight](https://read.readwise.io/read/01j58zjhy7z1c8sq4r57vvv6jp)) - 💭 this is why sales and marketing makes you dream and envision your ideal self A good attorney who wishes to cast doubt on DNA evidence will not tell the jury that “the chance of a false match is 0.1%.” The statement that “a false match occurs in 1 of 1,000 capital cases” is far more likely to pass the threshold of reasonable doubt. ([View Highlight](https://read.readwise.io/read/01j58zx6v25yjjcfpw7gyj8zz4)) - 💭 framing statistics to be more vibrant to invoke possibility effect people expect to have stronger emotional reactions (including regret) to an outcome that is produced by action than to the same outcome when it is produced by inaction. ([View Highlight](https://read.readwise.io/read/01j5917y8cxt356hytdzpmf0xf)) Daniel Gilbert and his colleagues provocatively claim that people generally anticipate more regret than they will actually experience, because they underestimate the efficacy of the psychological defenses they will deploy—which they label the “psychological immune system.” Their recommendation is that you should not put too much weight on regret; even if you have some, it will hurt less than you now think. ([View Highlight](https://read.readwise.io/read/01j5gssy8zn0m9qgjzbrg75tkc)) - 💭 goes against my philosophy of trying to live life without regrets A brain region known to be associated with conflict and self-control (the anterior cingulate) was more active when subjects did not do what comes naturally—when they chose the sure thing in spite of its being labeled LOSE. Resisting the inclination of System 1 apparently involves conflict. ([View Highlight](https://read.readwise.io/read/01j5gwh74t80690j2ysk8xxt16)) Fully 80% of the participants who reported that their pain diminished during the final phase of the longer episode opted to repeat it, thereby declaring themselves willing to suffer 30 seconds of needless pain in the anticipated third trial. ([View Highlight](https://read.readwise.io/read/01j5p403rrsn6s252vj3ts14h3)) - 💭 system one seem to take effect The cold-hand study showed that we cannot fully trust our preferences to reflect our interests, even if they are based on personal experience, and even if the memory of that experience was laid down within the last quarter of an hour! Tastes and decisions are shaped by memories, and the memories can be wrong. ([View Highlight](https://read.readwise.io/read/01j5p4b03stzqayd02r7pmberx)) - 💭 this is why we should journal, to have reflections closer to how we felt during the time rather than our recollection . A story is about significant events and memorable moments, not about time passing. Duration neglect is normal in a story, and the ending often defines its character. ([View Highlight](https://read.readwise.io/read/01j5p4etf3jcm9dtje03pg3c6n)) - 💭 emphasis on peak end rule for stories The focusing illusion creates a bias in favor of goods and experiences that are initially exciting, even if they will eventually lose their appeal. Time is neglected, causing experiences that will retain their attention value in the long term to be appreciated less than they deserve to be. ([View Highlight](https://read.readwise.io/read/01j5rsb42pexkpv030dnagp6y5)) - 💭 discrepancy between remembering and experiencing self The mistake that people make in the focusing illusion involves attention to selected moments and neglect of what happens at other times. The mind is good with stories, but it does not appear to be well designed for the processing of time. ([View Highlight](https://read.readwise.io/read/01j5rse2vxzjtms1aw65021fcq)) - 💭 reminds me of adhd brains prioritizing stimulation and hyperfixation, causing time blindness