The Art of Thinking Clearly

The Art of Thinking Clearly is a catalog of thinking errors when we make decisions. Here are some of my favorites from this book:

  • Swimmer’s Body Illusion: 
    • Professional swimmers don’t have perfect bodies because they train extensively. Rather, they are good swimmers because of their physiques.
    • Female models advertise cosmetics. But it is not the cosmetics that make these women model-like. The models are born attractive.
  • Sunk Cost Fallacy: When we have invested a lot of time, money, energy or love in something, this investment becomes a reason to carry on, even if we are dealing with a lost cause.
    • Investors frequently fall victim to this when they base their trading decisions on acquisition prices. The acquisition price should play no role, what counts is the stock’s future performance.
  • Reciprocity: Many NGOs and philanthropic organizations first give, then take.
  • Availability Bias:  We systematically overestimate the risk of being the victims of a plane crash, a car accident, or a murder. We attach too much likelihood to flashy or loud outcomes. We think dramatically, not quantitatively.
  • It’ll Get Worse Before It Gets Better Fallacy: If someone says “It’ll get worse before it gets better” you should hear alarm bells ringing. If the problem continues to worsen, the prediction is confirmed. If the situation improves, the expert can attribute it to his prowess. Either way, he wins.
  • Incentives:
    • In ancient Rome, engineers were made to stand underneath the construction at their bridges’ opening ceremonies.
    • Forget hourly rates and always negotiate a fixed price in advance.
    • Never ask a barber if you need a haircut.
  • Regression to Mean: Extreme performances are interspersed with less extreme ones.
    • Suppose your region is experiencing a record period of cold weather. In all probability, the temperature will rise in the next few days – back to the monthly average. The weather fluctuates around a mean.
    • Lowest performing schools were entered into a support program. The following year, the school moved up in the rankings, an improvement that the authorities attributed to the program rather than to natural regression to mean.
  • Liking Bias: There’s nothing more effective in selling anything than getting the customer to believe, really believe, that you like him and care about him. We see people as pleasant, if they are outwardly attractive or they are similar to us in terms of origin, personality or interests and they like us. If the buyer speaks slowly and quietly, do the same.
  • Base-Rate Neglect: Mark is a thin man from Germany with glasses who likes to listen to Mozart. Which is more likely? That Mark is a truck driver or he is a professor of literature in Frankfurt? Germany has ten thousand times more truck drivers than Frankfurt has literature professors. Therefore, it is more likely that Mark is a truck driver.
  • Forecast Illusion: Experts who make predictions enjoy free rein with few negative consequences. If they strike it lucky, they enjoy the publicity, consultancy offers, and publication deals. If they are completely off the mark, they face no penalties – neither in terms of financial compensation nor in loss of reputation. This win-win scenario incentivizes them to churn out as many prophecies as they can muster.
  • Action Bias: In a penalty situation in soccer, goalkeepers rarely stay standing in the middle – even though roughly a third of all balls land there.
  • Effort Justification: When you put a lot of energy into a task, you tend to overvalue the result.
    • Gangs and fraternities initiate new members by forcing them to withstand vicious tests. The harder the “entrance exam” is to pass, the greater the subsequent pride and the value they attach to their membership.
    • MBA schools work their students day and night without respite. Regardless of whether the course work proves useful later on, students deem the qualification essential for their careers simply because it demanded so much.
    • IKEA effect: The furniture we assemble ourselves seems more valuable than any expensive designer piece.
  • Volunteer’s Folly: An NGO is looking for volunteers to help build birdhouses for endangered species. If Jack earns $500 an hour, and a carpenter $50 an hour, then it would be more sensible to work an extra hour and hire a carpenter for six hours to make birdhouses. Doing so, his contribution would go much further than if the grabbed a saw and rolled up his sleeves.
  • Alternative Blindness: We systematically forget to compare an existing offer with the next-best alternative.
    • Suppose you have some money in your savings account. If your financial advisor proposes you a bond that will earn you 5 percent interest and says “That’s much better than the 1 percent you get with your savings account”. Then it’s wrong to consider just these two options. You would have to compare the bond with all other investment options and then select the best.
    • Let’s say your city is planning to build a sports arena on a vacant plot of land. Supporters argue that such an arena would benefit the population much more than an empty lot. We should compare it with all other ideas, for example building a school, hospital, etc.
  • Social Comparison Bias: There’s a tendency to withhold assistance to people who might outdo you. In the short term, other stars can endanger your status, but in the long run, you can only profit from their contributions. Others will overtake you at some stage anyway. Until then, you should get in the up-and-comers’ good books and learn from them.
  • Not-Invented-Here Syndrome: When people collaborate to solve problems and then evaluate these ideas themselves, NIH syndrome will inevitably exert an influence. We tend to rate our own ideas as more successful than other people’s concepts. Thus, it makes sense to split teams into two groups. The first group generates ideas, the second rates them, and vice versa.

Overall, it was a very enlightening and entertaining read as an overview of cognitive errors, highly recommended.

June 3, 2019

sarp centel

Sarp is a software developer. He writes about technology, books and software.
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