4 Human Psychology secrets all marketers should know
This book changed the way I take decisions
I just finished reading “Thinking Fast and Slow“ by Daniel Kahneman. It took me 4+ months to finish this masterpiece. I took that much time mainly because it’s super hard to digest, but it is absolutely worth the effort.
Without any adieu, let me point out some solid takeaways I had from the book:
System 1 vs System 2 Thinking: Humans mostly think in System 1 (Meaning emotional decision-making). We only shift to System 2 if the problem requires extensive logical reasoning. For eg: “Who will win the next presidential election?” will be answered immediately by our system 1 by processing the recent sentiment or headlines you have read. But a question like 4x(52-37)/2 pushes you to think with system 2 because you need to take time & do the math and emotion play close to zero roles here.
Availability bias: Humans take a decision based on how easy is it to recall a particular instance. For example, if you ask someone which state is more densely populated: Karnataka or Kerala? Mostly those who have visited both states might immediately say Karnataka. But the truth is that Kerala is far more densely populated than Karnataka if you look at the stats. The reason behind this wrong answer is that when you hear Karnataka, you immediately think about Bangalore traffic. But when you think about Kerala, you often think about backwaters, beaches, or tea plantations. This is where availability bias comes into play. Whatever you are most exposed to or whatever image you can recall faster drastically affects your decision-making. WYSIATI (What you see is all there is) - effect.
Low base effect or affinity towards the middle: This was really fascinating for me. This is where many managers or bosses get things wrong when managing people. If an employee performs very badly on any particular day, and the boss shouts at him - the next day that particular employee performs better. What do the boss and everyone around learn from this? They will conclude that the shouting helped the employee perform better. But the truth is far from this. The reason is that, that particular employee performs better on all other days and that one day was a “low base“ or a “bad day“ for him. Naturally and statistically, the next day his performance should be better compared to yesterday’s low base - doesn’t mean that the shouting helped him perform better - he was merely moving back to his average performance.
Prediction and expertise: Daniel Kahneman says that no one can predict anything. Almost everything is dependent on an infinite number of permutations and combinations. Nobody could predict world war 1, 9/11, the 2008 crash, covid, and many more events that had a gigantic impact on the world. It’s simply too much complicated for a human mind to be absolutely sure about anything. Luck plays a bigger role than many people think. Talking about expertise, people can truly become “experts “ only in fields where they get feedback as soon as they try something out. For eg, you can become an “expert driver“ because whatever input you give as a driver to the car, you can get immediate feedback, hence your brain is able to connect and learn what to do and what not to do. But in the case of fields where there is no immediate feedback, you can never call yourselves an expert because your brain cannot process what exactly caused the outcome to happen. An example could be long-term stock trading.
That’s not it, there are plenty more takeaways most of which I am unable to explain here in simple sentences. hence I would request all of you to grab a copy of the book and read it for yourselves.
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