27. Daniel Kahneman on Why Our Judgment is Flawed — and What to Do About It

The Undoing Project by Michael Lewis chronicles the intellectual and personal relationship between Daniel Kahneman and Amos Tversky, two Israeli psychologists whose research fundamentally changed our understanding of human decision-making. Their studies, conducted from the late 1960s to the 1980s, exposed systematic errors in human judgment under uncertainty and laid the foundation for behavioral economics. The book delves into their extraordinary lives, including their careers in the Israeli military, and how their personal differences and eventual estrangement affected their work. Lewis's narrative makes complex psychological concepts accessible through engaging storytelling, highlighting the profound impact of Kahneman and Tversky's work on various fields, including economics, medicine, and government regulation.

The book highlights the detrimental effects of noise in various fields such as medicine, law, economic forecasting, forensic science, bail, child protection, strategy, performance reviews, and personnel selection. Noise is defined as random or chaotic deviations from targeted behavior, which can lead to inconsistent judgments even among the same individuals under different conditions. The authors provide research-based insights and practical solutions to reduce both noise and bias, aiming to improve decision-making in multiple areas of life and work.

In this book, Daniel Kahneman takes readers on a tour of the mind, explaining how the two systems of thought shape our judgments and decisions. System 1 is fast, automatic, and emotional, while System 2 is slower, effortful, and logical. Kahneman discusses the impact of cognitive biases, the difficulties of predicting future happiness, and the effects of overconfidence on corporate strategies. He offers practical insights into how to guard against mental glitches and how to benefit from slow thinking in both personal and business life. The book also explores the distinction between the 'experiencing self' and the 'remembering self' and their roles in our perception of happiness.