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Thinking Fast and Slow Summary



Ever wonder how your brain works 🧠⠀

This book will probably put your curiosity still. And even some of the facts may shock you.⠀

Our brain has two systems. The first system operates automatically and quickly with little effort. And another system takes subjective experience, choices, and concentration. In short system 1 works on feeling and system 2 works on logic ⠀

Both have their plus point for example if there is a sudden fire in your house you will not think too much of what to do and at that time system 1 is best. But if you are getting in a relationship then the quick decision is not advisable then system 2 is must to used⠀

Some other key points in the books are as follow

Without self-control, you can't achieve anything whether it is a good relationship, right stock or success in business

And self-control requires attention and effort and things which reduce this are as follow

  1. Avoiding of old age

  2. Emotional response to things

  3. Trying to impress others

  4. Kindly response to the bad behavior of others

  5. Less logical decision


If you have any of the above qualities then congrats you have low self-control on yourself so please reverse the equation and try to build it.

Apart from it, the book includes various bias of our brain like

1)Availability bias = Not looking at statistics and just making decisions based on emotion. This is a habit of the brain which we should avoid

2)Base rate fallacy = When a person judges that an outcome will occur without considering prior knowledge of the probability that it will occur

3)Hindsight bias = False realization or understanding of the significance and nature of an event after it has occurred

4)The illusion of skill = When a person just get success based upon his/her luck and not by his/her skill

5)Unknown Unknown = Failed to imagine future by correct knowledge

6)WYSIATE = Focusing only on what best we known and just immediate threats and opportunities and not considering the future.

7)Endowment effect = That there is a large gap between at what a person willing to pay that and what the person willing to get that after reselling it for eg In an experiment it was found that a purchase was willing to give 500 for a mug to buy but after buying that he wanted 1000 to resell it.

8)Law of loss aversion = Losses looms larger then gain ( People will react more if $500 is lost then if they would have gained it )

9) Denominator neglect = Low probability event is much more heavily weighted when described in term of relative frequencies(how many) than in chances(how likely)

10)Disposition effect = To think only about gains while avoiding loss

though both would yield the same economic result

It relates to the tendency of investors to sell assets that have increased in value while keeping an asset that has dropped in value.

Also, read this = ⠀Fundamentals of investing


11) Preference reversal

Its the situation in which preferences for bundles or anythings are shifted after the options are juxtaposed(placing two elements close together or side by side) in that case People choose lower value over higher value when both are placed together but if they are placed separately then they will choose a higher value.


Conclusion⠀

This book will teach you how to use your brain and both systems to your advantage. The brain is one of the most powerful objects in the universe. Due to it, we have reached such a great height. This is a great book with mind-blowing facts. You should read it once in your lifetime.⠀

Want to listen to this book for free then check out this Audible audiobook

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