Reaction Paper on Decision Making Text Bok

Topics: Cognition, Daniel Kahneman, Behavioral economics Pages: 6 (2104 words) Published: June 1, 2013
Reaction Paper
Thinking, Fast and Slow 2011 a book by Daniel Kahneman

Submitted in partial fulfillment of the requirements
For Master of Business Administration Degree
Judgment in Managerial Decision Thinking

The secrets of the human brain: the two mechanisms that control our lives Thinking, Fast and Slow is a 2011 book by Nobel Memorial Prize winner in Economics Daniel Kahneman which summarizes research that he conducted over decades, often in collaboration with Amos Tversky. It covers all three phases of his career: his early days working on cognitive bias, his work on prospect theory, and his later work on happiness.

The book's central thesis is a dichotomy between two modes of thought: System 1 is fast, instinctive and emotional; System 2 is slower, more deliberative, and more logical. The book delineates cognitive biases associated with each type of thinking, starting with Kahneman's own research on loss aversion. From framing choices to substitution, the book highlights several decades of academic research to suggest that we place too much confidence in human judgment Psychologist Daniel Kahneman, one of the best known experts in cognition and pioneer of behavioral economics, studied for over four decades, decision-making mechanisms of the human brain and identified numerous cognitive errors that influence our decisions without us realizing it. In 2002, Kahneman was awarded the Nobel Prize for Economics for his work which has shown that man is not a "rational actor", as claimed many economists, but one subject to numerous pitfalls of intuition. Kahneman's Nobel was awarded a first, as for the first time the top prize for economics was awarded to a specialist in another field (in this case, psychology). Kahneman argues that human thinking is controlled by two systems: System 1, which he called "fast thinking" (quick thinking) is unconscious, intuitive and requires no voluntary effort or control the system in February, called "slow thinking" (thinking slow) is conscious, uses deductive reasoning and requires much effort.

To observe the person in the picture is angry no need for a conscious effort, realizing this instant and involuntary, in an example of quick thinking, typical of the system 1. Instead, to solve a multiplication problem and operation of 17 to 25 is needed directing conscious attention to a voluntary effort without which the answer can not be obtained. The latter is an example of application of the second system. System 1 is born, a consequence of the evolution and outcome of adaptation to environment over time, while system 2 is a specific component of man. In fact, what we perceive as self specific system is 2 - self conscious and rational, who manages beliefs, choices and decisions. Although we live under the impression that System 2 is responsible for most decisions we make, our life is controlled largely by the first system. The reason? Every day we have to take many decisions, making it impossible to use the second system for most. Because rational decisions take time for analysis and inference, which consumes energy efforts, the second system is used infrequently. In most cases, system 1 generates suggestions for the second (impressions, insights, intentions and feelings) that it adopts without modification. System 2 occurs when one system does not provide an immediate response (eg, if the problem 17 x 24) or when it detects an error will occur (as when we refrain to react in a wrong way difficult situation, the system control mechanism will generated two blocks system 1). The two are, however, limits: the researchers found that when a person is occupied with a problem that requires the use of two systems, the ability to self decreases, it is more likely to yield to temptation. System 1 shows systemic errors, cognitive errors that lead, often, the adoption of wrong decisions. In the latest book, Thinking Fast and Slow, Doctor Daniel Kahneman exposes some of these errors of...
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