Reading Reflection No. 2
Thinking Fast and Slow by Daniel Kahneman
The book Thinking Fast and Slow follows two 'characters', System 1 and System 2. These characters are designed to represent the part of ourselves that does the impulsive and fast thinking, and the other that is more rational and strategical. As Kahneman introduces and discusses these characters, he analyzes both his own research and research done by other economists, psychologists, philosophers, and scientists. The book is designed to contradict many of our immediate thoughts and beliefs, and back up our true state of being with qualitative and quantitative data. By expressing Systems 1 and 2 as characters rather than just parts of our mind, we are able to better understand the way that our brain works and how theses systems control every instance of our daily lives.
This book connects to this course because it analyzes how individuals act in the real world, and how they should act if they were acting completely rationally. Kahneman provides examples and analyzes people of all different ways of life, including business owners, CEOs, and entrepreneurs. I think that this book taught me how to balance my impulsive and rational modes of thinking, which I believe are important as an entrepreneur. There are times when it is important to trust your gut, and follow your System 1, but there are also times when it is necessary to break-down and truly understand a situation by utilizing your System 2. This concept of two selves within my brain was surprising but understandable once shown repeatedly with different examples.
I like to think of myself as a relatively rational person but was constantly proven to be irrational by the assignments and questions that are featured in the book. Oftentimes in this book, Kahneman poses a question to the reader before explaining what the question is referring to and means. I wrote each of my answers within the book and was constantly surprised by how my decisions would have been analyzed had I been in a subject in their research studies. I thought that as an economics major, I would have the upper-hand in 'solving' many of these questions, but this was rarely the case. I could occasionally apply principles that I knew and understood, but my instinctual answer was usually the one that was irrational. I think that these constant moments of surprise led me to the realization that no individual can be 100% rational. I always believed that this was true, but I have never had the proof laid out in front of me so clearly.
One of the things that stuck out to me the most was the concept and effects of a planning fallacy, in which people or businesses continue a venture even though the odds of success are slim. This often happens when large amounts of time or money are invested into a project before the idea of failure is proposed or realized. I think that this is something that entrepreneurs struggle with. If you dedicate five years and all of your savings into a business, you will try to do everything you can to make it succeed, but at some point, you may have to accept that there is nothing more you can do. If you continue to work on a failing project, you may end up depleting all of your economic and emotional resources.
I think that an assignment that could be incorporated into this class would be one where the student is forced to identify when their "breaking point" may be or when their planning fallacy has reached its peak. I think that every entrepreneur should make a decision before beginning their venture about how much of their own time and money they are willing to invest. It is important to persevere and use bootstrapping techniques, but at some point, your venture may not be able to be resuscitated anymore. I think that it would be beneficial for people to lay out what events may lead to this point and when they will know that they have achieved it. It could also be beneficial to lay out a plan for what occurs after this point.
Overall, I think that this book provides insights into many facets of our daily lives and provides an overwhelming amount of data for anyone who is trying to gain a better understanding of themselves or the people around them. Kahneman uses his own experiences and research to support his ideas, and connects them with the theories and research of others. After reading this book, I know that I will be more keened into which system I am applying to a decision and how this will affect the choice that I ultimately choose to make.
The book Thinking Fast and Slow follows two 'characters', System 1 and System 2. These characters are designed to represent the part of ourselves that does the impulsive and fast thinking, and the other that is more rational and strategical. As Kahneman introduces and discusses these characters, he analyzes both his own research and research done by other economists, psychologists, philosophers, and scientists. The book is designed to contradict many of our immediate thoughts and beliefs, and back up our true state of being with qualitative and quantitative data. By expressing Systems 1 and 2 as characters rather than just parts of our mind, we are able to better understand the way that our brain works and how theses systems control every instance of our daily lives.
This book connects to this course because it analyzes how individuals act in the real world, and how they should act if they were acting completely rationally. Kahneman provides examples and analyzes people of all different ways of life, including business owners, CEOs, and entrepreneurs. I think that this book taught me how to balance my impulsive and rational modes of thinking, which I believe are important as an entrepreneur. There are times when it is important to trust your gut, and follow your System 1, but there are also times when it is necessary to break-down and truly understand a situation by utilizing your System 2. This concept of two selves within my brain was surprising but understandable once shown repeatedly with different examples.
I like to think of myself as a relatively rational person but was constantly proven to be irrational by the assignments and questions that are featured in the book. Oftentimes in this book, Kahneman poses a question to the reader before explaining what the question is referring to and means. I wrote each of my answers within the book and was constantly surprised by how my decisions would have been analyzed had I been in a subject in their research studies. I thought that as an economics major, I would have the upper-hand in 'solving' many of these questions, but this was rarely the case. I could occasionally apply principles that I knew and understood, but my instinctual answer was usually the one that was irrational. I think that these constant moments of surprise led me to the realization that no individual can be 100% rational. I always believed that this was true, but I have never had the proof laid out in front of me so clearly.
One of the things that stuck out to me the most was the concept and effects of a planning fallacy, in which people or businesses continue a venture even though the odds of success are slim. This often happens when large amounts of time or money are invested into a project before the idea of failure is proposed or realized. I think that this is something that entrepreneurs struggle with. If you dedicate five years and all of your savings into a business, you will try to do everything you can to make it succeed, but at some point, you may have to accept that there is nothing more you can do. If you continue to work on a failing project, you may end up depleting all of your economic and emotional resources.
I think that an assignment that could be incorporated into this class would be one where the student is forced to identify when their "breaking point" may be or when their planning fallacy has reached its peak. I think that every entrepreneur should make a decision before beginning their venture about how much of their own time and money they are willing to invest. It is important to persevere and use bootstrapping techniques, but at some point, your venture may not be able to be resuscitated anymore. I think that it would be beneficial for people to lay out what events may lead to this point and when they will know that they have achieved it. It could also be beneficial to lay out a plan for what occurs after this point.
Overall, I think that this book provides insights into many facets of our daily lives and provides an overwhelming amount of data for anyone who is trying to gain a better understanding of themselves or the people around them. Kahneman uses his own experiences and research to support his ideas, and connects them with the theories and research of others. After reading this book, I know that I will be more keened into which system I am applying to a decision and how this will affect the choice that I ultimately choose to make.
Hey Alex,
ReplyDeleteI really enjoyed your post! After reading your submission, I feel like I have a solid understanding of the book you read and it sounds really good. It's interesting that you found that the assignments and questions in the book made you seem irrational when you consider yourself to be the opposite. Your post makes me now want to read this book!
Hey Alex
ReplyDeleteI really love what you post and I really like when you saidThese characters are designed to represent the part of ourselves that does the impulsive and fast thinking, and the other that is more rational and strategical. As Kahneman introduces and discusses these characters, he analyzes both his own research and research done by other economists, psychologists, philosophers, and scientists. The book is designed to contradict many of our immediate thoughts and beliefs, and back up our true state of being with qualitative and quantitative data. By expressing Systems 1 and 2 as characters rather than just parts of our mind, we are able to better understand the way that our brain works and how theses systems control every instance of our daily lives. This was a great point.