Lewis chose for his next biography the Israeli behavioral psychologists Daniel Kahneman and Amos Tversky. This book is in equal part a story of the history of the men’s lives and a history of their decades long collaboration- a history of ideas. Their big idea was that humans did not behave like homo economicus. In the real world humans were not always rational, utility maximizing agents. Kahneman explains what drove him to begin his study of psychology, “my interest in psychology was as a way to do philosophy. To understand the world by understanding why people, especially me, see it as they do. By then the question of whether God exists left me cold. But the question of why people believe God exists I found really fascinating. I was not really interested in right and wrong. But I was interested in indignation. Now that’s a psychologist!…. When someone says something, don’t ask yourself if it is true. Ask what it might be true of.”
Tversky initially found philosophy appealing as well, but “the trouble with philosophy, Amos thought, was that it didn’t play by the rules of science. The philosopher tested his theories of human nature on a sample size of one- himself. Psychology at least pretended to be a science.” Tversky would gravitate to the most formal of psychological subfields- mathematical psychology. Still, he was circumspect about his career choices. “It’s hard to know how people select a course in life. The big choices we make practically random. The small choices probably tell us more about who we are.”
Kahneman and Tversky’s collaborations focused on the fact that people were less statistically rigorous when making decisions than was previously supposed. “Even people trained in statistics and probability theory failed to intuit how much more variable a small sample could be than the general population- and that the smaller the sample, the lower the likelihood that it would mirror the broader population.” Even professionals had a mistaken conception of random samples. “Our stereotype of randomness lacks the clusters and patterns that occur in true random sequences.”
Kahneman and Tversky, over the years, developed multiple rules of thumb, which they called heuristics, to describe how the human mind actually worked. The representativeness heuristic stated, “when people make judgements…. they compare whatever they are judging to some model in their minds…. When people calculate the odds in any life situation, they are often making judgements about similarity.” The second heuristic was availability bias. “The more easily people can call some scenario to mind- the more available it is to them- the more probable they find it to be. Any fact or incident that was especially vivid, or recent, or common- or anything that happened to preoccupy a person- was likely to be recalled with special ease, and so be disproportionately weighted in any judgment.” The anchoring heuristic stated that people were influenced by terms of reference. Anchoring is the reason some restaurants leave suggested tips of 18%, 20%, and 25% on the bottom of receipts. People are inclined to tip with reference to that spectrum rather than, say, 5-10%. Kahneman would later come up with the simulation heuristic on his own. This revealed “the power of unrealized possibilities to contaminate people’s minds. As they moved through the world, people ran simulations of the future…. Reality wasn’t the only frustration…. Emotion was also fed by its proximity to another reality…. Regret was the most obvious counterfactual emotion, but frustration and envy shared regret’s essential trait.” Kahneman called these “the emotions of unrealized possibility.” These alternative simulations would affect people more depending on two factors- “the desirability of the alternative” and “the possibility of the alternative.”
Kahneman and Tversky would discover, explore, and research a myriad of other biases people systematically make. When thinking about the future, people fail to account for regression to the mean, which is always the most likely outcome. Kahneman wrote, “because we tend to reward others when they do well and punish them when they do badly, and because there is regression to the mean, it is part of the human condition that we are statistically punished for rewarding others and rewarded for punishing them.” On storytelling bias- “the production of a compelling scenario is likely to constrain future thinking…. There is much evidence showing that, once an uncertain situation has been perceived or interpreted in a particular fashion, it is quite difficult to view it in any other way.” On specificity bias- “people respond differently when given no specific evidence and when given worthless evidence…. When no specific evidence is given, the prior probabilities are properly utilized; when worthless specific evidence is given, prior probabilities are ignored.” On memory and hindsight bias- “once they knew the outcome, they thought it had been far more predictable than they had found it to be before…. All too often, we feel like kicking ourselves for failing to foresee that which later appears inevitable.” The endowment effect revealed “people attached some strange extra value to whatever they happened to own, simply because they owned it.” This was related to a status quo bias and also to the idea that people were generally risk averse. Loss aversion is the idea that people value losses at about double as they value gains. Framing is the idea that a 10% chance of dying is viewed differently than a 90% chance of living. It all depends on presentation.
The mind does its best to cope with a world that is constantly barraging it with new information. But it is not always rational or internally consistent. It uses shortcuts, tricks, and mechanisms to get through the complex day. Kahneman and Tversky “had explained repeatedly that the rules of thumb that the mind used to cope with uncertainty often worked well. But sometimes they didn’t; and these specific failures were both interesting in and of themselves and revealing of the mind’s inner workings.” The reason these biases are all so important is that these are not random biases; they are systemic to the workings of the mind.
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