Daniel Kahneman's "Thinking, Fast and Slow"
W 2021

A scientific flood from psychology poured into economics and undermined its most basic premise.  The result was Behavioral Economics.  Inventing it won psychologist Daniel Kahneman a Nobel Prize.  We'll study it using his accessible, surprise-packed book.

Kahneman presents new understandings about how the mind works.  The brain has two ways of processing information, as if it had two separate systems.  One system is slow and goes step by step.  It does rational thinking.  The other system is fast and associative.  It provides an endless stream of responses made from memory and sensory associations.  We will study the many unexpected ways in which the two systems collide and interact.

Then we will explore why human statistical intuition is stunningly bad.  Why does the mind prefer to use substitutes, or heuristics, when simple statistics would give better answers?  Kahneman connects heuristics and fallacies to risk analysis, prediction, intuition, and human overconfidence for some important and remarkable results. 

We will even meet a new species--the Econ.  Econs are humanoids who don't have our fast, associative mental system with its behavioral quirks.  For centuries economists have used totally-rational Econs instead of humans to explain economic behavior.  Join us as we learn what happens when real humans at last enter the world of the economists.

This SDG is a repeat of Thinking About Behavioral Economics as offered in Winter 2013, with the same core book, Coordinator, and course plan.

•                   Book                                 Key Topics
  Week      Chapters                                                                                                                                                             
  1            I, 1                Introduction; System 1 and System 2
  2            2, 3, 4           paying attention; lazy System 2; priming
  3             5, 6, 7           cognitive ease; intentional causality; "What You See Is All There Is"
  4            8, 9, 10         basic assessments; heuristic question; small samples yield extreme results
  5            11, 12, 13     anchoring; availability bias; availability cascade                                              
  6            14, 15, 16     representativeness; conjunction fallacy; causal stereotypes                             
  7             17, 18           regression to the mean; intuitive predictions
  8            19, 20, 21     narrative fallacy; illusion of validity; statistical outcome prediction
  9            22, 23, 24     intuitive expertise; planning fallacy; the premortem
  10          25, 26, 27     expected utility theory; prospect theory; endowment effect
  11          28, 29, 30     loss aversion; the fourfold pattern; denominator neglect
  12          31, 32, 33     broad framing; disposition effect; preference reversals
  13          34, 35, 36     framing effects; the experiencing self and the remembering self; duration neglect
  14          37, 38, C      experienced well-being; the focusing illusion; Conclusions

Daniel Kahneman, Thinking, Fast and Slow, Farrar, Straus and Giroux, New York, 2011