THINKING, FAST AND SLOW BY DANIEL KAHNEMAN | ANIMATED BOOK SUMMARY

THINKING, FAST AND SLOW BY DANIEL KAHNEMAN | ANIMATED BOOK SUMMARY


Imagine you’re one of the first human beings,
and you’re walking with your kid and you see a lion.
And you don’t know what a lion is, so you take your kid over to play with him
and the lion eats your kid. So you go home and you’re sad,
but it’s okay, you get your wife pregnant, and in five years,
you’re walking again with your new kid and you see a lion far away.
This time you hide with your kid, and the lion eventually leaves and you both
survive. So you come out,
you start walking with your kid again and a bird flys over
and all of a sudden your kid drops dead. And you go home sad again,
you get your wife pregnant again, and you make a promise to yourself.
You’re going to make sure that you hide your new kid from lions,
and that you’ll hide him if you see a bird flying over. So there are two ways that we think.
Both of the decisions that you made are based on the fast, automatic thought process,
which Kahneman calls System 1. System 1 is where we find how irrational
and illogical or just simply how stupid we really are
so it can lead us to not value System 1 or think that it’s useless. If you had used your slow, more rational and
logical thinking, you would have found that you were right about
the lion, but the bird had nothing to do with your kid’s
death. But, we should value System 1,
because it has huge benefits. It’s the reason why we’ve survived.
Yes, maybe at the cost of some really ridiculous assumptions,
like your kid dying every time a bird flys over,
but if we had rationally thought about what a loud noise might mean and analyze it
carefully instead of being scared and running away from
it immediately, we wouldn’t be here. So big idea 1 is: Understanding System 1 and
System 2. There are huge benefits to both systems,
the problem however really arises when we use System 1 instead of System 2,
when System 2 would be the appropriate system to use.
And this leads us to all kinds of biases and fallacies that are not optimal.
It’s not optimal to think that if a bird flys over,
your kid will drop dead. So if I were to ask you these two questions,
what would your answer be? 1. Is the height of the tallest redwood more
or less than 1,200 feet? 2. What is your best guess about the height
of the tallest redwood? So one group was asked these questions,
And another group was asked the exact same questions
except instead of 1,200 feet in the first question,
this time they were asked whether the height of the tree
was more or less than only 180 feet. So what do you think the answers looked like?
The first group’s mean guess was 844 feet. The second group’s mean guess was only 282
feet. That is a HUGE difference. This is what is known as anchoring.
So ask yourself and throughout this video, how can knowing this be useful to you.
Dan Ariely, one of my favorite economists, talks about how we have no idea about most
things and what they should cost.
If you’re not an expert just like we aren’t in most things,
you don’t know how tall a redwood tree should be,
I don’t know what a microwave should cost when I go buy it…
Should it be $99, $199? I have no idea…
So we use different ways to approximate what it should be,
and anchoring is one of them. So again how is this useful to you personally?
If you’re the buyer do you want to look at the MSRP,
and be anchored to that? If you’re selling something,
how do you want to set up your MSRP to use anchoring to your advantage? Big idea 2 is: Understanding anchoring. So one of the things that I really enjoy about
my life is the peace of mind I have while doing things.
When I visit somewhere I’m not worried about a terrorist attack,
and when I fly there I’m not worried about the plane crashing.
And that peace of mind largely comes from the fact
that I’m not really a big consumer of mainstream media. But I meet people all the time who are really
constantly worried. “Have you seen how terrorism is taking over
the world? What are we headed towards?
Have you seen how planes are just crashing all the time now?”
But in reality, it’s not like the chances of those two things
have risen in some dramatic proportion. They’re highly unlikely,
and I mean a probability very close to zero that your plane will crash. And this is what is known as the science of
availability. Even an event that has an almost
non-existent probability of happening to you can be assigned a reasonable or even a high
probability by you just because of what’s available to you. So again ask yourself,
how can you use this concept to make your life better?
Is it better to enjoy your life and realize that the world
is actually not as bad as commonly portrayed, or watch the news every day where you’ll be
shown constant death and destruction because that’s
what sells? Big idea 3 is: Understanding the Science of
Availability Now let’s say I offer you to play a game with
me. We’re going to flip a coin,
and if you win, you win a $1000. And if you lose, you lose a $1000.
Do you want to play that game? If you’re like most people,
that is a game that you do not want to play. What if we change the rules a little bit.
If you win, you win $1100. And if you lose, you lose only a $1000.
From an expected value point of view, that is a good game to play.
But if I asked you to play that game right now,
and you knew that there was a 50% chance of losing your $1000,
if you’re like most people you still wouldn’t play
even though there’s also a 50% chance of winning $1100. This is called Loss Aversion.
Most people are very loss averse. In fact, you have to offer somewhere about
$2000 to get people to play. Now this might be intersting,
but again ask yourself, how can you use understanding this in your
life? You know you’re going to be more convincing
explaining to someone what they are risking losing,
instead of what they could possibly gain. So maybe you want to convince someone that
being an alcoholic is bad… How do you want to go about doing that?
Do you want to talk about how they could possibly gain a better job
and make more money if they overcome this problem,
or do you want to tell them how they’re going to lose
their loved ones like their spouse and children? Big idea 4 is: understanding Loss Aversion. Now imagine I’m your doctor
and I have to do an operation on you and I tell you,
“There is a %10 chance that you’re going to die.”
I could also tell you, “There is a 90% chance that you’re going to
live.” Now from a statistical point of view,
there is absolutely no difference in those two statements.
BUT… In the first case,
you’re going to feel much worse than in the second. This is known as framing.
How you frame the exact same situation can have dramatically different consequences. So big idea 5 is: Understanding framing.
Again ask yourself, how can you use this? How can you use framing
to make good things more appealing and convincing to your friends or your children
or whoever else you want to influence? And finally, big idea 6 is:
Understanding the Sunk Cost Fallacy. This is all about letting your past decisions
influence your present decisions. So think of John.
He has no idea about poker, but he thought he would go gamble and play.
Fast forward into the night, and John has now lost a $1000 and hasn’t won
anything. Now if John looks at the odds of his winning
from this moment on, which would require the use of System 2,
which he’s probably not going to use, he would find that the best thing to do
is completely disregard the $1000 and get up and leave.
The $1000 already lost has nothing to do with what his odds are starting from this
moment. But John is going to be heavily influenced
by the $1000 and most likely keep playing and losing even
more. Let me give you another example…
Jen bought 50 boxes of candy a few months ago,
so her house is full of candy. But she now finds out about the importance
of eating healthy, and she realizes that the candy actually hurts
her, but she can’t just get rid of it.
She payed money for it at some point, so it’s really hard for her
even though the candy is going to hurt her. Now you might look at John and Jen and say,
“Heh… What a bunch of idiots!” But the reality is that you and I are no different…
Look around your house right now. How much stupid shit have you bought over
the years that’s now just laying there taking up space,
bothering you, you’re never even going to use it again,
but you don’t get rid of it? There is no difference between Jen or John
and you in this situation. The chair that you bought gets in the way
all the time, there is no room for it in your little house,
it’s causing you pain, but how can you get rid of it?
You paid $59 for it at some point. This is what is known as the sunk cost fallacy.
Your past decisions shouldn’t affect what is good for you now.
If you paid money for a bunch of candy at some point,
it doesn’t mean that it’s good for you to keep eating it.

100 thoughts on “THINKING, FAST AND SLOW BY DANIEL KAHNEMAN | ANIMATED BOOK SUMMARY

  • A big thank you to everyone who pointed out that the two cliparts were mixed. I added annotations, but the sad guy is supposed to be next to "10% chance die" and the happier guy is supposed to be next to "90% chance live." Thanks again, and sorry about that! 🙂

    Get any FREE audiobook of your choice here: http://audibletrial.com/fightmediocrity

    If you want a suggestion for the free audiobook or for reading a book, here's FightMediocrity beginner's reading list:

    1. Rich Dad Poor Dad: http://amzn.to/1VLAklY

    2. The 4-Hour Workweek: http://amzn.to/1Qn5DA5

    3. How to Win Friends and Influence People: http://amzn.to/1VLAoCe

    4. The 48 Laws of Power: http://amzn.to/1VLAoSK

    5. The Way of the Superior Man: http://amzn.to/1Qn5EDZ

    6. Man's Search for Meaning: http://amzn.to/1Qn5GM0

    7. Mastery: http://amzn.to/1VLArOu

    8. Mindfulness for Beginners: http://amzn.to/1VLAs4S

    9. The Obstacle is the Way: http://amzn.to/1VLAslw

  • Many thanks to author and the whole FightMediocrity team!
    The way of book overviewing is terrifically clear to catch and make feeling afterwards as if you've just read a book.

  • I clicked on that one randomly, but holy shit! That video is really great! It's a very nice animation and everything you explain is so understandably put by all those examples. And on top it's funny! Laughed my ass off at the beginning, when you said that thing with getting your wife pregnant. Keep going!

  • Outcome ? System-2 should work like system-1 but this book doesn't teaches how. . it just describes two systems . . . .and human Psychology . . .

  • So, you said that "the problem arises if we use System 1 when System 2 is more appropriate choice" but, how do we know which system to go for in different situations? .. esp when the answers provided by system 1 and 2 are contradictory to one another..

  • I think part of the problem with the risk aversion question is the way its framed. Even if the odds are in your favor, the harm of loosing $1000 is greater to the adverage person that the gains that $1000 would give you, if you don't have the disposable income to keep you from relying on a loan. Loans take away far more of your money than investment gains can be unless you are rigging the system, which is why most of the people who play the market and win are the people who can control the outcomes moreso than others.This is why those who have the disposable income to just throw money towards risks in their favor become even more rich usually unless they are complete idiots or just incredibly unfortunate/betrayed. I mean $1000 in savings can mean the difference of life and death for some people sadly. Winning $1100 can hardly ever justify the much harsher losses to the potential profits

  • I'm sorry but "idea 3" is you just burying your head in the soil and pretending the world around doesn't exist, I call it "ignorance is bliss" equation.

  • Excellent video, this voice to visuals narration is captivating to any audience out there. You inspire me to read more and more, thanks!

  • A ‘thinking model’ developed based on Dr. Daniel Kahneman concept of “Thinking fast” and “Thinking slow”.

    https://youtu.be/Id9NZGLGAxU

  • Man, I am simply getting addicted to your videos. Thank a lot for provide some great value to subscribers. Would you mind sharing what is the tool you use to make your videos. Thank again and keep up this great work. Cheers

  • U r making full summary of this book, then r u able to monetize this video isn't there any copyright issues

  • Very good book you are presenting here. I love reading. In general, it´s a very interesting hobby. You can learn so much from books. Some of my favorites are on my small website: idea-empire.jimdo.com Great animation by the way. Keep up your good work.

  • fucktard thats not thinking fast tell me you didnt write what you said on this video and said all with peaceful mind you stupid idiot. the title is about thinking fast nothing else damn idiots on youtube waste of time

  • Thinking slow and thinking fast in our comprehensive thinking process.
    https://youtu.be/Id9NZGLGAxU

  • The poker analysis is basically playing on tilt. People get upset they lost. They refuse to accept the loss and many play reckless out of anger trying to win back their money. This almost always results in wild bluffs that get called and they lose more money.

  • Hey i also have a fond of books so i have created a channel , so please have a look https://youtu.be/uBuqsPjNObk

  • I like the video, nicely done and informative. I just get goosebumps when someone says 'imagine that your kid' and then pictures something catastrophic. I don't like it. The caliber is too big comparing to what the video is about. I know it seems cool etc. but I guess there is a some kind of a boundary there. The author says so much about not watching the aggressive news but at the same time is making people visualise the worst nightmare of their lives. What for? A pet would do 😛

  • This is a great video, you are a true inspiration man! I've made a similar video on this book, where I take a little bit of a different approach: I present the takeaways of the book and how they affect your investment decisions. Biases such as anchoring, framing and substitution are presented. If you want to check it out, head over to my channel.

    Cheers!

  • The Sunk Costs fallacy is important, but there must be an opposite fallacy, perhaps on the line of "The grass is always greener on the other side of the road", like if you're stuck in a traffic jam, and afraid you'll be going slow for hours, while actually it might only be a few minutes. So you might decide to exit and take a different way, while you have ZERO information about the alternative route traffic AND you have a cost of changing routes. Similarly in relationships "Sunk cost fallacy" might help you stick around long enough to work through difficult problems that you would prefer to avoid completely, if you thought you could just find a better person to be with. So in these cases neither fast or slow thinking can tell you what to do, and it might be the best answer isn't to decide based on known facts, but a randomizer like flipping a coin, and then just sticking with that choice and hoping for the best.

  • I’m currently halfway through the book. Your video is very informative and explains the concepts in a very attractive way, thanks alot

  • I offer you using all popular units , like Celesius and Kelvin for temp, I mean since start of video (i was eating lunch) i didnt notice all video because you was speaking with "fEET" , even if you want just use one the international system of units use metr as unit for height. hope it helps you to improve your videos and get more subscribers.

  • Do you ever review new authors? infamous ones? I am a self published author would love a review (paid or unpaid that is) https://www.amazon.com/dp/1728741637

  • I SHARED YOUR CHANNEL TO 18 FRIENDS MOST OF THEM WERE THANKFUL TO YOU TO CREATE SUCH HELPFUL CONTENT 2 OF THEM HAD IMMEDIATELY SUBSCRIBED YOUR CHANNEL.
    I THINK YOU WOULD BE THE GREATEST MENTOR FOR THIS PROBLEM SIR:
    SIR THE THING IS THAT I STUDY IN HIGH SCHOOL AND I ONLY HAVE ONE DAY TO COMPLETE 15 UNPREPARED CHAPTERS OF MATH I NEED TO EXTRACT MAXIMUM TIME, LEARN MAXIMUM, BE PRODUCTIVE ,MAKE EXCELLENT PREPARATION WITHOUT ANY DELAY . PLEASE HELP ME SIR IT IS VERY MUCH CRUCIAL FOR MY LIFE AND IT IS REALLY URGENT.SIR REMEMBER MY URGENCY IS "ALMOST OF MY LIFE AND MY DEATH" – IF YOU ARE UNDERSTANDING. SIR RESPONSE AS QUICK AS POSSIBLE.ॐ

  • For reference, the range of elevations in Redwood National and State Parks is from 0ft to 3,170ft. The only estimate I've seen of something similar to a mean elevation is around 400 ft. Meaning that in all likelihood the people who guessed 844 ft were likely nearly spot on even though the answer was different to the one you had before you phrased the question.

    There is actually controversy along these lines regarding mountains when people say 'tallest' when they are referring to the one with the highest peak, but there are many factors that play into that ambiguity.

  • https://www.youtube.com/watch?v=z7K_ryZDy_M#action=share just look at this review but pls be nice and fair =)) <3FightMediocrity

  • Thank you "FightMediocrity". Always awesome topics and presentations. I see in the comments that you've brought out the funny out of some people; but, that is just the way of man kind.

  • Review on the book|| " freedom at the midnight" ||Malayalam || YOU KNOW IT
    https://www.youtube.com/watch?v=cS7WXdku5PI&t=24s

  • You could argue that not playing the game that is £1100 if you win and £1000 loss if you lose is rational. Possibly because the £1000 on the line is worth more than the £1100 won to the individual due to diminishing marginal utility. The £1000 would may be spent on more essential items so losing this would decrease quality of life more than gaining £1100 would increase it.

  • Apparently I'm not like everyone else. I would be happier to hear that I have a 90% chance of survival than a 10% risk of dying. Because I rather hear a positive statement then a negative. About the risk management: To most people reality kicks in. No matter if I won a million and the chances were 50% i could never gamble away 1000 dollars because I simply can't spare them. Even if the chances of winning were 80%. I know that the arguments here are theoretical but I believe that reality is also a part of the calculation. All the best!

  • Most cognitive scientist don't buy "dual process" theories anymore. Instead, they view thinking to be the result of the interplay between many different functions of the brain. But the worst thing is this guy attempts to characterizes intuition backwards. Where it's main function appears to be sense patterns amnongst distant information and generate sets, the conman makes a vile attempt to invert those properties. Gerd Giegerenzer and others have shown system 1 has a critical role I'm high level problem solving.

  • wow you really sold me this book, it is on my wish list on audible but I've decided I want to buy it, I've known about your channel for some years now and have been subbed for one, I thought I wouldn't be proce to anything in this book even though its on my wish list but the way you described sunk cost I can say im prone to it so will buy the book now, they should actually sponsor you for reviewing books

    edit: grammar

  • Let me explain in simple terms1.Thinking for a longer time increases logical sense2. we have our own logic according to the evidence we have3. We are controlled my mainstream media 4. we care more about the loss than the gain5. how you see the situation is how you react to it6.  your past desecions shouldn't affect the present

  • The lion and bird analogy does not fit. With the very limited information the caveman had available, avoiding birds would be a sensible precaution and would still be arrived at by system 2.

    On the coin flip: If you reduce the stakes and offer me $11 if I win while I pay $10 if I lose, I will probably take you up on it. I am aware of the mathematical expectations. But that thousand dollars might mean someone can't pay his rent. That is more an awareness of secondary consequences than pure risk aversion.

  • Yikes https://chrome.google.com/webstore/detail/threelly-ai-for-youtube/dfohlnjmjiipcppekkbhbabjbnikkibo

  • I had to read this book 3 times just to absorb everytning properly. You have summarized it very well & saved alot of people the pain. Thumbs up!!👍

  • If you're interested in Kahneman's work, my latest video uses systems 1 and 2 and substitution to look at why the UK is so divided over Brexit

Leave a Reply

Leave a Reply

Your email address will not be published. Required fields are marked *