Two selves
- remembering self constructed by system 2 but still have duration neglect and peak-end rule following. This was demonstrated with the cold hand test.
- experiencing self is in the moment, used to create the U-index of unpleasantness.
Econs and Humans
- Econs act rationally always, they read small print, and calculate the value of two bets.
- Humans are not well described by the rational agent model. Noto to say they are irrational, but they often need help to make more accurate judgments and decisions especially considering that they have system 1 and system 2 thinking giving them conflicting answers.
- The failure of humans to act rationally leads to libertarian paternalism which is based on the idea that "freedom has a cost, which is borne by individuals who make bad choices, and by a society that feels obligated to help them." Protecting individuals against their mistakes is not controversial if you realize that humans do not follow the laws of economics.
Two systems
- System 1 is prone to heuristics, meaning it generates answers to related questions to the one actually asked. System 1 does not realize when the information it is using to make decisions is unreliable or sparse. What you see is all there is, intensity matching, associative coherence, anchoring, nonregressive predictions, overconfidence, and many others.
- System 2 is who we think we are, articulating judgments, making choices, but it often endorses or rationalizes ideas and feelings that were generated by system 1. System 2 is prone to narrow framing. You can get system 2 to kick in by getting outside observers to introduce doubt into your decisions. Checklists, reference-class forecasting, and premortems.
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