Book Review “Thinking, Fast and Slow” Essay
He is very often talking about "System 1" and "System 2". System 1 is fast; it's intuitive, associative, metaphorical, automatic, impressionistic, and it can't be switched off. Its operations involve no sense of intentional control, but it's the "secret author of many of the choices and judgments you make" and it's the hero of Daniel Kahneman's book Thinking, Fast and Slow.
System 2 is …show more content…
We also hugely underestimate the role of chance in life (this is again System 1's work). Analysis of the performance of fund managers over the longer term proves conclusively that you'd do just as well if you entrusted your financial decisions to a monkey throwing darts at a board. There is a tremendously powerful illusion that sustains managers in their belief their results, when good, are the result of skill; Kahneman explains how the illusion works. The fact remains that "performance bonuses" are awarded for luck, not skill. They might as well be handed out on the roll of a die: they're completely unjustified. This may be why some banks now speak of "retention bonuses" rather than performance bonuses, but the idea that retention bonuses are needed depends on the shared myth of skill, and since the myth is known to be a myth, the system is profoundly dishonest – unless the dart-throwing monkeys are going to be cut in.
In an experiment designed to test the "anchoring effect", highly experienced