Book Summary 25 — The Art of Clear Thinking
This was one of the best summaries of behavioural psychology books I have read so far.
The book outlines 99 biggest errors in thinking we make.
- Survivorship Bias
Success is more visible than failure, we give success a much higher probability than it really has. Failures we forget, don’t write and talk about. Often remind yourself of failures and visit graves of failed ventures.
- Swimmer’s Body Illusion
Great swimmers don’t have great bodies because they swim. Rather they have great bodies and that’s why they are great swimmers. Does Harvard make students smart or do they choose smart students upfront? Don’t fall for the illusion, be real about what you see in the mirror and work with what you have.
- Clustering Illusion
The human brain seeks patterns — ie in the clouds, stocks, etc. Be skeptical about patterns in complex things — chances are it’s just random and there by chance.
- Social Proof
Herd instinct, Peer Pressure — If 50,000 people do something stupid, it is still stupid.
- Sunk Cost Fallacy
Just because we spend a lot of time and money doing something doesn’t mean we need to finish it if it doesn’t make sense. Consider alternative options and opportunity cost.
You get and give back. Don’t accept stuff if you don’t want to feel obliged to give back.
- Confirmation Bias I
Interpret new info so it fits with your existing theory — confirming it. We filter out anything that goes against it. When exceptions come up listen to them carefully, don’t ignore them!
- Confirmation Bias II
We only look for arguments which agree with us. Go the other way — write down your theory and go actively looking for things which disapprove it.
- Authority Bias
Challenge authority — especially the ones which exert authority over you in areas they shouldn’t.
- Contrast Effect
We always compare things, the starker the contrast the more we over- and undervalue. Cheap vs expensive, ugly vs beautiful, etc.
- Availability Bias
We create a picture of the world from examples that most easily come to mind. Spend time with people who think differently to you — we require others’ input.
- The It’ll-Get-Worse-Before-It-Gets-Better-Fallacy
That is not true, things don’t need to get worse. Set yourself milestones and even if they might appear to get worse at first, you can still hit the milestones.
- Story Bias
Stories give us a false sense of understanding as they simplify. This leads us to take bigger risks.
- Hindsight Bias
Don’t fall for it. If you really want to check how well you can forecast, write down your predictions and check back on them a couple of months later.
- Overconfidence Effect
We constantly overestimate our knowledge — experts even more so. Be skeptical of predictions.
- Chauffeur Knowledge
Do not confuse people who just talk for people who actually know. True experts know what they don’t know and will say so.
- Illusion of Control
Know what you can control and affect and focus on that.
- Incentive Super-Response Tendency
People respond to incentives by doing what is in their best interest.
- Regression to Mean
Things always return back to ‘normal’. Not magically, just because of statistics.
- Outcome Bias
We tend to evaluate decisions based on the result not on the decision process. Stick to the right decision process even if it doesn’t work and keep improving it.
- Paradox of Choice
Large selection leads to inner paralysis, poor decisions and discontent. Realise you can never make a perfect decision and stick to what you really want.
- Liking Bias
Flattery, compliments and good looks — they work. Be aware of it.
- Endowment Effect
We consider things we own to be of more value.
Improbable coincidences happen — they are improbable, but they do happen.
People fall into the same opinions. Appoint devil’s advocates to question conclusions.
- Neglect of Probability
Consider the real probability not the emotional response which adds weight.
- Scarcity Error
It should not be important if an item is disappearing fast, judge it fairly by what it offers.
- Base-Rate Neglect
Consider the most common cause first, not the most exotic solution.
- Gambler’s Fallacy
There is no balancing force out there for independent events.
- The Anchor
What we hear just before will be used as an anchor. Disregard irrelevant information.
Just because it always happened that way doesn’t mean it will forever. Don’t assume everything lasts forever — it has, but only until now.
- Loss Aversion
We hate to lose more than we like to win.
- Social Loafing
Diffusion of Responsibility — Why invest all your energy when half will do as others are helping as well. When in groups still make individuals accountable and set goals for them, not just as a group.
- Exponential Growth
When it comes to growth rates, don’t trust your instinct — it’s wrong. Simple Trick: Take 70 and divide it by the growth rate that tells you how long it takes to double. 7% YOY growth of accidents, means the number of accidents doubles every 10 years.
- Winner’s Curse
Don’t ever overpay — set your price and don’t go over it. Otherwise, even if you win you will be cursed.
- Fundamental Attribution Error
We attribute everything to human actions, but what really determines outcomes is the situation and the world around them — don’t over-attribute results to a specific person.
- False Causality
Correlation is not causality. Sometimes there is no link at all.
- Halo Effect
We take one factor and don’t pay attention to anything else anymore. Dig deeper, invest the time!
- Alternative Paths
Consider how people got to where they are and their riskiness of their alternative paths and your own. Hard work and security is more important than having luck in a risky investment.
- Forecast Illusion
Be critical about forecasts. Does the person who made them make a lot of them, how accurate have they been, does he have anything to lose?
- Conjuction Fallacy
We like good stories, be on the lookout for happy endings and convenient details — ask for more details which might not help the story.
Every word stirs us in a certain direction depending on how you frame it — be aware of it.
- Action Bias
We like looking active even if it doesn’t achieve anything. We are unable to just sit still, sometimes we should.
- Omission Bias
Deliberate inaction can be just as bad as deliberate action — it has the same result. If you’re not part of the solution, you are the problem.
- Self-Serving Bias
We attribute success to ourselves and failures to external factors, be realistic.
- Hedonic Treadmill
We adjust to what we have and are always unhappy. Remember how much worse you were off in the past — Be Happy!
- Self-Selection Bias
Pay attention who you select, if you select a specific group you definitely will get the results which you can expect from that group.
- Association Bias
We condemn the messenger. Don’t
- Beginner’s Luck
Try to disprove your theories. Beginners luck can be disastrous.
- Cognitive Dissonance
If something doesn’t work with your world, you explain it differently — ie that job which you didn’t get.
- Hyperbolic Discounting
We prefer stuff now to when it is far in the future. Control your impulses and think logically trough your options.
- “Because” Justification
If you use “because” people are way more likely to do things for you.
- Decision Fatigue
Willpower is like a battery. Focus on the decisions which are important, drop or let someone else make the easy decisions.
- Contagion Bias
We can’t ignore connections we have with certain items — long history or personal attachment.
- Problem with Averages
Question averages for their outliers and distribution.
- Motivation Crowding
Money is not the best motivator and sometimes a bad one.
- Twaddle Tendency
The more eloquent the words the more we believe them. Simplicity is king!
- Stage Migration or Will Rogers Phenomenon
Two pools with different average IQs, if you want to improve both averages move the worst person from the better pool to the worse and both will jump up.
- Information Bias
Delusion that more information guarantees better decisions. Only capture and look at the necessary info.
- Effort Justification
When you put a lot of effort into something you overvalue its result. Can be used to make you bond to a group or like an object more.
- Law of Small Numbers
It’s all just fluctuation and distribution — low numbers happen and don’t have to be alarming.
Set them high for yourself and friends, this will raise motivation, low for anything you can’t control.
- Simple Logic
Reject the easy answers which pop into your head, think about it twice.
- Forer or Barnum Effect
Statements can be kept so general that they relate to everyone.
- Volunteer’s Folly
Volunteering is not the most efficient thing we can do for charities, our time is better spent doing what we do well and then contributing that way — it adds more value than just spending time on a farm planting trees which someone else can do much better than us.
- Affect Heuristic
It’s a gunfire trigger if we like or dislike something. We make decisions based on how we feel not what we think — Smile!
- Introspection Illusion
Nothing is more convincing than we are to ourselves, but we don’t know best — so be cautious.
- Inability to Close Doors
Don’t keep doors open which you don’t want — save yourself the decisions. Some doors are not worth opening even though it’s so easy to turn the handle.
We put too much weight on new stuff, the world doesn’t change so quickly. We still wear clothes not space suits.
- Sleeper Effect
The source of the argument fades faster than the argument — that’s why obvious propaganda works after a while, not straight away.
- Alternative Blindness
We forget to compare the offer with the next best. Open your eyes to all possible solutions.
- Social Comparison Bias
Tendency to withhold assistance to people who might outdo you, even if you look foolish in the long run. Hire smarter people than yourself!
- Primacy & Recency Effects
The more recent the better we remember it.
- Not-Invented-Here Syndrome
We think anything we created is unbeatable and much better like a steak sauce which we made ourselves.
- Black Swan
Be ready to ride improbable awesome opportunities and stay away from big trouble — stock market, debt, etc.
- Domain Dependence
Insights don’t always translate between domains. Often we can’t even translate what we teach to our own life. Try though! Transfer book smarts to street smarts.
- False-Consensus Effect
We often thing everyone else feels and thinks like we do.
- Falsification of History
Admitting mistakes is emotionally difficult. We adjust past views to fit current ones.
- In-Group Out-Group Bias
We tend to help people within our group. Make sure you don’t belong to groups which you don’t like to be part of.
- Ambiguity Aversion
Risk — probabilities are known. Uncertainty — unknown. You can’t make calculations on Uncertainty.
- Default Effect
It’s the easy option — most people go with it.
- Fear of Regret
You fear the remorse if you do something wrong, so you don’t do anything.
- Salience Effect
Outstanding features receive way more weighting and importance. Do not be blinded by salience, stories and irregularities.
- House-Money Effect
Depending on how we get money we treat it differently. It’s hard to put it back into perspective — but do try.
To get motivation back you need blood sugar and kick back and relax.
It’s the most stupid thing, as you will never gain anything from it — don’t be envious, it doesn’t help.
Give the story and statistic a face, but also ask for the numbers behind the face.
- Illusion of Attention
We are confident that we notice everything around us — we don’t. ie Gorilla in the middle of basketball players.
- Strategic Misinterpretation
The more at stake the most exaggerated our assertions become. We basically exaggerate as there often is no repercussion.
Trust your gut feeling as well, don’t overthink.
- Planning Fallacy
We always overplan and think we can get much more done.
- Deformation Professionnelle
Don’t just consider problems from one angle or give them to an expert — you will only think in your area of expertise. Rather consider all possible solutions from all different areas.
- Zeigernik Effect
We seldom forget uncompleted tasks.
- Illusion of Skill
It’s often just luck — not what actual skill you have.
- Feature-Positive Effect
Absence is harder to detect than presence. We place greater emphasis on what is present than on what is absent.
- Cherry Picking
Set real goals and measure against them. What often happens is that teams shoot an arrow and draw the bulls eye around it.
- Fallacy of a Single Cause
It’s never the cause of one single event — consider everything.
- Intention-To-Treat Error
Pay attention to samples which fall out of the sample group because they don’t qualify, failed or dropped out because of some other reason — they should be considered too.
- News Illusion
News are a waste of time and irrelevant.