Daniel Kahneman on Making Decisions

HomeMental Models

The following notes are from an interview with Daniel Kahneman on The Knowledge Project Podcast.

Happiness has to do with your emotions, with how you feel, and the emotional tone on your life. Life satisfaction is all about how you feel about your life when you think about your life.

Having a lot of money doesn't make you happier, but being poor makes you miserable. That threshold in America was $70,000/year. Anything below that and you struggle a bit but anything above that doesn't seem to have any sizeable changes on your life satisfaction.

Restraining forces - Push them from where they are to A. Or you can eliminate the thing that's holding you back from that.

Behaviors don't reflect the personality, behaviors are dependent on the situation people are in. If people are behaving in strange ways, look at the situation they're in.

Fundamental Attribution Error - A bias in social psychology that people assume it's because of their personality that they're acting the way they are. In reality, it's quite likely the situation that's making them do it. But when we're in that position, we argue that it's the situation that caused us to do the thing.

The Endowment Effect - Feelings getting in the way of clear thinking. I'd ask for more money to sell you my sandwhich than I paid to get it.

Ready made answers and assumptions get in the way of clear thinking. If someone asks me a question, I already have some ready made answers that stop me from thinking about something in a new or different way.

If you really want to improve the quality of your decision making, use algorithms wherever you can.

When you make decisions, each option should be thought of like a candidate. Break up each dimensions and evaluate each dimension separately, then look at the profile and make the decision.

Delay your intuition as long as you can. Most people form an impression about something and then spend the rest of the time confirming that opinion, whether they know it or not. If you delay your intuition, you can look for real evidence and decide what to do.

Judgement is what you do when you integrate a lot of information informally into a score of some kind.

When trying to judge someone's judgement, ask them to explain how they got to their conclusions or judgement. Do they use evidence? Is the explanation logical? If you do this, you can see if the conclusion was reached long before the actual judgement was made.

Being deliberate can be a negative sometimes. If you're more deliberate, you look as if you don't know what to do. But when you act with confidence right away then you show people you know what to do and they respect you as a leader.

Premortem - Picturing yourself in the future where you made the decision you're contemplating and it turns out to be a disaster. Write the history of that decisions and disaster on a piece of paper.

If you make a lot of decisions, keep a "Decision Journal." Write down each big decision you make, the options you're evaluating, how you thought through the decision, which decision you made, the degree of confidence you have toward that decision, and the overall outcome of that decision.

Written by
Dalton Mabery