"We can only see what we are prepared to see."

We often think we know more than we really do. Being aware of this can help us make better decisions and stay humble in what we assume.

6. Overconfidence Bias

"Plans are nothing; planning is everything."

If we like one thing about a person, we tend to assume other positive things about them, too. For example, if someone is friendly, we might also think they’re smart, even without knowing for sure.

7. The Halo Effect

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"The greatest mistake you can make in life is to be continually fearing you will make one."

"Prejudice is a great time-saver. You can form opinions without having to get the facts."

"The first principle is that you must not fool yourself, and you are the easiest person to fool."

People hate losing more than they enjoy winning. This is why we sometimes avoid risks, even when the possible reward is bigger than the risk itself.

3. Fear of Losses

Our brain uses shortcuts (called heuristics) to make decisions quickly, but sometimes these shortcuts lead to mistakes or biases. For example, we might base a decision on a recent memory rather than facts.

2. Mental Shortcuts and Biases

"It is not what you look at that matters, it’s what you see."

We tend to underestimate how long something will take. This leads to unrealistic deadlines and rushed work. Being more realistic with time can help us plan better.

9. Planning Fallacy

We rely too much on the first piece of information we hear (the "anchor"). For example, hearing a price first affects how you judge other prices, even if it’s unrelated.

4. Anchoring Effect

"The most common way people give up their power is by thinking they don’t have any."

The way information is presented (framed) affects how we make decisions. For example, people are more likely to agree with something if it’s framed as a gain rather than a loss.

8. Framing Effect

"The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge."

We judge how likely something is based on how easily we remember examples. For example, after hearing about a plane crash on the news, you might fear flying even though it's very safe.

5. Availability Heuristic

"Intuition is nothing more and nothing less than recognition."

System 1: This is fast, automatic, and emotional. You use it when making quick decisions, like recognizing a friend or reacting to danger.System 2: This is slow, logical, and takes effort. You use it when solving a difficult problem or planning something important.

1. Two Ways of Thinking

Major New York Times bestseller Winner of the National Academy of Sciences Best Book Award in 2012 Selected by the New York Times Book Review as one of the ten best books of 2011 A Globe and Mail Best Books of the Year 2011 Title One of The Economist's 2011 Books of the Year One of The Wall Street Journal's Best Nonfiction Books of the Year 2011 2013 Presidential Medal of Freedom Recipient Kahneman's work with Amos Tversky is the subject of Michael Lewis's The Undoing Project: A Friendship That Changed Our Minds In his mega bestseller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation—each of these can be understood only by knowing how the two systems shape our judgments and decisions. Engaging the reader in a lively conversation about how we think, Kahneman reveals where we can and cannot trust our intuitions and how we can tap into the benefits of slow thinking. He offers practical and enlightening insights into how choices are made in both our business and our personal lives—and how we can use different techniques to guard against the mental glitches that often get us into trouble. Winner of the National Academy of Sciences Best Book Award and the Los Angeles Times Book Prize and selected by The New York Times Book Review as one of the ten best books of 2011, Thinking, Fast and Slow is destined to be a classic.

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Daniel Kahneman (born 5 March 1934) is an Israeli-American psychologist and winner of the 2002 Nobel Memorial Prize in Economic Sciences, notable for his work on behavioral finance and hedonic psychology.With Amos Tversky and others, Kahneman established a cognitive basis for common human errors using heuristics and biases (Kahneman & Tversky, 1973, Kahneman, Slovic & Tversky, 1982), and developed Prospect theory (Kahneman & Tversky, 1979). He was awarded the 2002 Nobel Prize in Economics for his work in Prospect theory. Currently, he is professor emeritus of psychology at Princeton University's Department of Psychology.

4. Anchoring Effect

Similar ideas to 4. Anchoring Effect

3. Anchoring Bias:

Anchoring

Anchoring Bias