Thinking, Fast and Slow 📙
A review + summary of the cornerstone work of Daniel Kahneman
Hey there! This is a Book Edition 📚 — where I publish our review + summary of a famous non-fiction book in our space.
It is made possible by the book club in the community, where every two months we decide on a non-fiction book to read, and we review it together in a live event at the end of the period.
Over the last two months, we've been diving into "Thinking, Fast and Slow" by Daniel Kahneman.
Kahneman was a psychologist and economist. In 2002 he was awarded the Nobel Prize in Economic Sciences for his work in applying psychological insights to economic theory, particularly in the area of judgment under uncertainty.
He passed away earlier this year — so reading and reviewing his work felt like a fitting tribute.
So, "Thinking, Fast and Slow" is not just another pop psychology book. It’s a cornerstone work in understanding human decision-making and cognitive biases, backed by decades of rigorous research.
And it shows.
In fact, if you get the physical edition, the first thing you will probably notice is that this is a hefty book. It clocks in at nearly 500 pages, with a 35-page appendix of notes and references. It’s the work of a lifetime: the lifetime of one of the most brilliant and prolific scientists of his generation.
“Thinking, Fast and Slow” is organized following a top-down approach: it starts with big ideas and gradually drills down into specifics. So, while it contains an inordinate amount of ideas, it never feels daunting or overwhelming, thanks to the clear structure, plenty of examples, and the easy writing style. We will follow its structure pretty much verbatim in this review.
Also, while it wasn't written specifically for people in tech, I have found its insights to be profoundly relevant to our job.
As engineering leaders, we're constantly making decisions: we estimate projects, assess risks, allocate resources, and navigate complex human dynamics. Most of these decisions are made under uncertainty, and Kahneman's work shows just how bad we are at these. He explains, with scientific precision, why we make irrational decisions, even when we believe we're being perfectly logical.
Ultimately, the book challenges us to think about thinking, by revealing invisible forces that shape our judgment. Understanding these forces helps us make better decisions, in work and life.
So let’s explore the key concepts from the book, and discuss how they apply to our work. Here's our agenda for today:
🧠 Two Systems — understanding our dual thinking processes
🎭 Biases and Heuristics — recognizing our mental shortcuts
📊 Prospect Theory — rethinking how we assess value and risk
🤝 The Two Selves — balancing experience and memory in design
Let's dive in!
🧠 A Tale of Two Systems
Kahneman's central thesis revolves around two modes of thought: System 1 and System 2. This concept is fundamental to understanding how we make decisions:
1️⃣ System 1 — is fast, intuitive, and emotional. It operates automatically and quickly, with little or no effort and no sense of voluntary control.
2️⃣ System 2 — on the other hand, is slower, more deliberative, and more logical. It allocates attention to mental activities that demand it, including complex computations.
What's surprising — and somewhat unsettling — is how much we rely on System 1, even when we think we're being logical and methodical. We often pride ourselves on our analytical abilities (especially in engineering 🫠), but Kahneman shows that we're far more inclined to make quick, intuitive judgments.
The main problem is that we don’t have a reliable way to figure out when to engage System 2 — the analytical side — vs. accepting the quick answer provided by System 1.
This is perfectly displayed in the famous bat and ball problem:
"A bat and ball cost $1.10. The bat costs one dollar more than the ball. How much does the ball cost?”
Most people answer 10 cents, which is System 1 stuff. The correct answer (5 cents) would require engaging System 2, but we usually accept the quick answer because it looks good.
This reminded me of chess. During lunch I often watch Hikaru videos, where he often talks about the problem of knowing when to spend your time. Modern chess has shifted more and more towards shorter time controls (e.g. 10-minute games), which means players spend little time, on average, on every move. What’s interesting, especially in grandmaster games, is that players do not spend a similar amount of time on every move — they blitz most of them (i.e. few seconds) and spend long chunks of several minutes on a few crucial ones.
Blitz moves are System 1 — quick judgment and pattern-matching — while the long ones are when players engage their analytical brains.
Knowing when it is worth spending more time on a move — i.e. when to engage System 2 vs when to trust intuition — is a crucial quality that separates outstanding players from the good ones.
Ok, but chess is time-constrained: in real life, couldn’t we deliberately skew towards System 2 most of the time? No sir, because System 2 is 1) slow, and 2) extremely costly, while System 1 is basically free.
Using System 2 quickly leads to cognitive strain, so we can rely on it sparingly.
About this, Kahneman described an experiment where people were asked to solve math problems while simultaneously memorizing a 7-digit number. As their System 2 was busy with the memorization, they made impulsive (System 1) decisions on the math problems, leading to comical mistakes.
But what mistakes? Time to talk about biases 👇
🎭 Biases and Heuristics
In the second chapter, Kahneman explores a wide range of cognitive biases and heuristics. These shortcuts often serve us well, but they can also lead us astray, especially in complex scenarios.
The book provides a long list, and you may already know many of them. Here are the ones that resonated the most with my own experience: