Daniel Kahneman Talks at Google

“Political columnists and sports pundits are rewarded for being overconfident.” —Daniel Kahneman

Thinking, Fast and Slow at Google

November 7th, 2011, the date when Daniel Kahneman held his Thinking, Fast and Slow talk at Google. If you have already read the book with the same title, you will be familiar with the different topics discussed by Kahneman in this talk. Thinking, Fast and Slow is a great book and highly recommended to each and everyone.

Since I do seem to suffer from some kind of Kahneman liking bias, I enjoyed this talk a lot. You’ll find the video at the end of this post, together with the slides from the presentation.

I have transcribed a few words (maybe not a few, but anyway…) from Kahneman’s talk, all of which you’ll find below.

 

Expert Intuition

When can you trust intuition and when can’t you? And then it becomes an issue of; is the world regular enough so that you can learn to recognize things? Or and then did that particular individual have an opportunity to learn the regularities of the world? And so, the world of chess players is highly regular. And statistically, the world of poker players is very regular. So there is an element of chance, but there are rules and the mind is so set to that if there are rules in the environment and we’re exposed to them for a long time, and we get immediate feedback on what is right and wrong, or fairly immediate feedback, we would acquire those rules. So all of us have expert intuition even if we are not physicians and we’re not chess players, master chess players. I recognize my wife’s mood from one word on the telephone. You know, most of you can do that. That’s people that you know very well. All of us recognize dangerous driver on the next lane. And you know we get cues and we don’t necessarily know what is the cue but this person is driving erratically and could do something dangerous. And this is a lot of reinforced practice and we’re very good at that. We can learn about those, there are differences. Among experts, among professionals, in the level of expertise that they have and they depend in the level of intuitive expertise that they can develop. So for example, compare anesthesiologists to radiologists. Anesthesiologists get very good feedback, an immediate feedback whenever they do anything wrong. You know they have all those measurements in real time. Radiologists get really miserable feedback about whether they’re right or wrong. So you could expect an anesthesiologist to develop intuition much more than you would expect radiologists to develop intuition. And so, that is part of the answer about intuitive expertise. We don’t need to disagree about that because we know pretty much when intuitive expertise is likely to develop. And as I said, we also, that means that intuitive expertise is not going to develop in a chaotic universe or in a chaotic world. So for example, I personally do not believe that that’s stopped, because people pick stocks to invest in can develop intuition because, simply because the market takes care of it. There isn’t enough regularity in what’s going to happen to prices for intuitions to develop. We also know about political forecasters when they forecast long-term, they are really no better than a dart-throwing monkey. And they are certainly not better than the average reader of the New York Times. Intuitions and the reasons it’s not the pundit’s fault. And that research has been done with pundits and CIA analysts and regional experts. It is really not their fault and they cannot predict the long range future 10 or 15 years . They are quite good at short-term predictions. They are really not good at all in long-term predictions. And if the world is not predictable, then you are not going to predict it. When there are marginal situations where there is some predictability, poor formulas do better than individuals. That is the domain where formulas beat individuals regularly, a domain of fairly low predictability. Because when there are weak cues, people are not very good at picking them up and are not good at using them consistently. But formulas can be generated on the basis of experience and they will do a better job than individual judgement.

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Thinking, Fast and Slow: Slides

GTDK1

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Thinking, Fast and Slow: YouTube Video

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System 1 and System 2

Kahneman elaborates on the two systems when answering a question in the end of the session.

Well, you know, System 1 is extremely sophisticated. So it’s not, that is in part why I don’t believe there is any simple representation in the brain of those two systems because what I’ve called System 1 operation by their characteristics include both innate responses and highly skilled responses. And the whole, the representation of world knowledge is in System 1. So it’s hard to classify one as primitive. And I should add that System 2, the reasoning system as it were is not necessarily rational. I mean, System 2 knows what it knows. It knows what we know and we don’t know a lot. So it’s not that System 2 is infallible and that all mistakes come from System 1. We make very significant mistakes when we think very seriously. Yes.

Further Kahneman Reading

Book Excerpt: Thinking, Fast and Slow, Daniel Kahneman

Prospect Theory: An Analysis of Decision under Risk by Daniel Kahneman and Amos Tversky Econometrica, 47(2), pp. 263-291, March 1979

Sunday Book Review: Two Brains Running, New York Times

Daniel Kahneman: Beware the ‘inside view’ – Book Excerpt McKinsey Quarterly

Investing by the Books: Kahneman, Daniel – Thinking fast and slow (Book review)

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