This is a great book

"Thinking, Fast and Slow" by Daniel Kahneman is a renowned book that explores the two systems of thinking that govern our cognition:

System 1:
This is the fast, automatic, and intuitive mode of thinking. It operates effortlessly and quickly, drawing on heuristics and patterns to make snap judgments and decisions.
System 2:
This is the slower, more deliberate, and analytical mode of thinking. It involves conscious reasoning, logic, and effortful mental processes.

I think Kahneman's work has had a profound impact on our understanding of decision-making, cognitive biases, and human behaviour.

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Dual process

Dual process thinking is a psychological concept that describes two distinct modes of cognitive processing, in other words, how humans process information and make decisions. Daniel Kahneman wrote in his best selling book, “Thinking, Fast and Slow” about System 1 and System 2 thinking.

• System 1:
  This is often referred to as the "fast" or "automatic" thinking system. It involves quick, intuitive, and often emotional responses. System 1 thinking doesn't require conscious effort and is responsible for making rapid judgments and decisions based on instinct and previous experiences.

• System 2:
  This is the "slow" or "deliberative" thinking system. It involves analytical, rational, and logical thinking. System 2 thinking requires conscious effort and is used for more complex decision-making, problem-solving, and critical thinking.

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Awareness can travel

c/o Getty Images

In psychology, a heuristic is a mental shortcut that allows people to make decisions quickly and efficiently. It is the way you feel (your affect) toward a particular stimulus that influences the decisions you make. No one likes to be outwitted or to be tricked, I wrote a little about “affect heuristics” on Tuesday because advertisers are perpetually after our attention and politicians after our votes, both of them employing as much inducement and enticement as they can muster. With heuristics, the brain can make faster and more efficient decisions, albeit at the cost of accuracy. Do people in your organisation exhibit curious, predictable biases?

In 1974, behavioural economics researchers Amos Tversky and Daniel Kahneman identified a specific mental process used to simplify decision-making. They showed that humans rely on a limited set of heuristics when making decisions with information about which they are uncertain. The three key heuristics are as follows: 

1. Representativeness - allows people to judge the likelihood that an object belongs in a general category or class based on how similar the object is to members of that category.

2. Anchoring - allows people to estimate a number by starting at an initial value (the “anchor”) and adjusting that value up or down. 

3. Adjustment and availability - allows people to assess how often an event occurs or how likely it will occur, based on how easily that event can be brought to mind.

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Prospect theory

The Prospect Theory was developed by Daniel Kahneman and Amos Tversky in 1979. It’s a behavioural model (psychology theory) that describes how people make decisions when presented with alternatives that involve risk, probability and uncertainty. See video below for a one minute explanation.

People usually make decisions based on a perfectly rational evaluation of the potential gains and losses that are associated with that decision. The pain of losing something is stronger than the pleasure of gaining something. Our risk tolerance are different based on the decisions we face. When we are speaking about possible gains we tend to be risk averse, in other words, we will choose options that provide lower expected returns and more certainty. Whereas when the decision is about potential losses we tend to be risk seeking. Which means we will accept the lower than expected value as long as we feel we have some potential to avoid losses.

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Can we learn to make better decisions?

I attended a dinner party last Friday and one of the topics of discussion was Daniel Kahneman’s book, “Thinking Fast and Slow”. For us people in marketing, we don’t need a perfect understanding of psychology all we need is a way of thinking about the way people think. One of the things that makes it really useful for us marketeers is that the book gives a very intelligent and perceptive way of doing it.


In general, people are really good at seeing the mistakes that other people make and are not so good at seeing the mistakes they are making. I am not a self-help guru but Kahneman highlights that educated gossip is a very good thing because people anticipate gossip when they make decisions. And I think if people anticipate intelligent gossip they would make better decisions than if they anticipate unintelligent gossip.


I think that during these hard times “Thinking Fast and Slow” is more relevant than ever. Over the last decade, there has never been a greater need to deepen our understanding and create new models of human behaviour. Having a better understanding of people will help us create products and services for what people want and find easy to use. Forgive me if this sounds too idealistic but I’m optimistic and want to make the world a better place for us all. Contact me via e-mail and let me know how this thinking makes you feel.

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