KANEMAN, DANIEL(Kahneman, Daniel) (b. in Tel Aviv 1934) - Israeli-American psychologist, one of the founders of psychological (behavioral) economic theory, winner of the Nobel Prize in Economics 2002 "for the use of psychological methodology in economic science, in particular - in the study formation of judgments and decision-making under conditions of uncertainty” (together with W. Smith).
The life of D. Kahneman vividly demonstrates the cosmopolitanism of modern scientists. Having begun his studies at the Hebrew University of Jerusalem (1954 - bachelor's degree in psychology and mathematics), Kahneman completed it already at the University of California, Berkeley (1961 - doctoral degree in psychology). Over the next 17 years, he taught at the Hebrew University of Jerusalem, combining this with work at a number of universities in the US and Europe (Cambridge, Harvard, Berkeley). Since the late 1970s, Kahneman has temporarily retired from work in Israel, engaging in joint scientific projects with American and Canadian scientists in research centers in these countries. Since 1993 he has been working as a professor at Princeton University in the USA, since 2000 he has been teaching again at the Hebrew University of Jerusalem in parallel.
Although D. Kahneman is a psychologist by education and profession, the award of the Prize to him. A. Nobel in Economics in 2002 caused approval among economists, who recognize the great importance of his works for economic science. Kahneman became the first Israeli and the second "non-economist" (after mathematician John Nash) to win the Nobel Prize in Economics.
The main object of Kahneman's research is the mechanisms of human decision-making in a situation of uncertainty. He proved that the decisions people make deviate significantly from what is prescribed by the standard economic model homo oeconomicus. Criticism of the model of "economic man" was engaged even before Kahneman (one can recall, for example, Nobel laureates Herbert Simon and Maurice Allais), but it was he and his colleagues who first began to systematically study the psychology of decision making.
In 1979, the famous article appeared Prospect Theory: Analyzing Decision Making Under Risk, written by Kahneman in collaboration with psychology professor Amos Tversky (Jerusalem and Stanford Universities). The authors of this article, which laid the foundation for the so-called behavioral economics (behavioral economics), presented the results of a huge number of experiments in which people were asked to choose between different alternatives. These experiments proved that people cannot rationally estimate either the magnitude of expected gains or losses, or their probabilities.
First, it was found that people react differently to equivalent (in terms of gain/loss ratio) situations depending on whether they lose or win. This phenomenon is called asymmetric response to changes in wealth. A person is afraid of loss, i.e. his feelings from losses and gains are asymmetrical: the degree of satisfaction of a person from the acquisition of, for example, $ 100 is much lower than the degree of frustration from the loss of the same amount. Therefore, people are willing to take risks in order to avoid losses, but are not inclined to take risks in order to gain benefits. Second, experiments have shown that people are prone to misjudgment of probability: they underestimate the likelihood of events that are most likely to occur and overestimate much less likely events. Scientists have discovered an interesting pattern - even mathematics students who know the theory of probability well do not use their knowledge in real life situations, but proceed from their stereotypes, prejudices and emotions.
Instead of decision theories based on the theory of probability, D. Kahneman and A. Tversky proposed a new theory - perspective theory(prospect theory). According to this theory, a normal person is not able to correctly assess future benefits in absolute terms, in fact, he evaluates them in comparison with some generally accepted standard, seeking, above all, to avoid worsening his position. Prospect theory can be used to explain many irrational actions of people that are inexplicable from the standpoint of "economic man".
According to the Nobel Committee, having demonstrated how badly people are able to predict the future, D. Kahneman "with sufficient reason called into question the practical value of the fundamental postulates of economic theory."
Of course, this is not the merit of Kahneman alone, a great supporter of scientific co-authorship. During the award, he candidly admitted that the honor of being awarded the Nobel Prize rarely reflects the contribution to science of one person. “This is especially true in my case, since I received the award for the work I did many years ago with my close friend and colleague Amos Tversky, who passed away in 1996. The thought of his absence on this day makes me very sad,” Kahneman said.
It is curious to note that the American economist Vernon Smith, who was awarded the Nobel Prize in Economics at the same time as Kahneman, is his constant opponent, arguing that experimental verification basically confirms (rather than refutes) the principles of rational behavior familiar to economists. The decision of the Nobel Committee to share the 2002 Prize in Economics equally between the critic and the defender of the model of the rational "economic man" is not only academic objectivity, but also a kind of irony over the situation in modern economics, where opposing approaches are approximately equally popular.
Proceedings: Tversky A., Kahneman D. Judgment under uncertainty: Heuristics and biases, 1974; Kahneman D., Tversky A. Prospect theory: An analysis of decisions under risk, 1979; Tversky A., Kahneman D. The framing of decisions and the psychology of choice, 1981; Kahneman D., Tversky A. The psychology of preferences, 1982; Kahneman D., Miller D.T. Norm theory: Comparing reality to its alternatives, 1986; Kahneman D. Experimental economics: A psychological perspective, 1987; Tversky A., Kahneman D. Advances in Prospect theory: Cumulative Representation of Uncertainty, 1992; Kahneman D., Wakker P., Sarin R. Back to Bentham? Explorations of Experienced Utility, 1997.
Natalia Latova
Psychologist Daniel Kahneman is one of the founders of psychological economics and perhaps the most famous researcher on how a person makes decisions and what errors based on cognitive distortions he makes while doing so. For his study of human behavior under uncertainty, Daniel Kahneman received the 2002 Nobel Prize in Economics (this is the only time that a psychologist has won the Nobel Prize in Economics). What did the psychologist manage to discover? Over the many years of research that Kahneman conducted with his colleague Amos Tversky, scientists have found out and experimentally proved that human actions are guided not only and not so much by the mind of people as by their stupidity and irrationality. .
And with this, you see, it is difficult to argue. Today we bring to your attention 3 lectures by Daniel Kahneman, in which he will once again go through the irrational human nature, talk about cognitive distortions that prevent us from making adequate decisions, and explain why it is not always worth trusting expert judgment.
Daniel Kahneman: "The Mystery of the Experience-Memory Dichotomy"
Using examples ranging from our relationship with vacations to our colonoscopy experience, Nobel laureate and founder of behavioral economics Daniel Kahneman demonstrates how differently our experiencing self and our remembering self experience happiness. But why is this happening and what are the consequences of such a splitting of our “I”? Find the answers in this lecture.
Now everyone is talking about happiness. I once asked one person to count all the books with the word "happiness" in the title published in the last 5 years, and he gave up after the 40th, but of course there were even more. The rise in interest in happiness is huge among researchers. There are many tutorials on this topic. Everyone wants to make people happier. But despite such an abundance of literature, there are some cognitive distortions that practically do not allow you to think correctly about happiness. And my talk today will be mainly about these cognitive traps. This applies to ordinary people who think about their happiness, and to the same extent scientists who think about happiness, since it turns out that we are all equally confused. The first of these pitfalls is an unwillingness to admit how complex the concept is. It turns out that the word "happiness" is no longer such a useful word, because we apply it to too many different things. I think there is one specific meaning that we should limit ourselves to, but, in general, this is something that we will have to forget about and develop a more comprehensive view of what well-being is. The second trap is the confusion of experience and memory: that is, between being happy in life and feeling happy about your life or feeling that life suits you. These are two completely different concepts, but both of them are usually combined into one concept of happiness. And the third is the illusion of focus, and it's a sad fact that we can't think of any circumstance that affects our well-being without distorting its significance. This is the real cognitive trap. And there is simply no way to get it all right.
© TED conferences
Translation: Audio Solutions Company
Read related material:
Daniel Kahneman: "A Study of Intuition" ( Explorations of the Mind Intuition)
Why does intuition sometimes work and sometimes not? Why do most of the experts' forecasts fail to come true, and is it possible to trust the experts' intuition at all? What cognitive illusions interfere with making an adequate peer review? How does this relate to the specifics of our thinking? What is the difference between "intuitive" and "thinking" types of thinking? Why can intuition not work in all areas of human activity? Daniel Kahneman talked about this and much more in his video lecture Explorations of the Mind Intuition.
*Translation starts at 4:25 minutes.
© Berkeley Graduate Lectures
Translation: p2ib.ru
Daniel Kahneman: "Reflections on the Science of Well-Being"
Extended version of Daniel Kahneman's TED talk. The public lecture given by the psychologist at the Third International Conference on Cognitive Science is also devoted to the problem of two "I" - "remembering" and "real". But here the psychologist considers this problem in the context of the psychology of well-being. Daniel Kahneman talks about modern research on well-being and the results that he and his colleagues have been able to get in recent times. In particular, he explains what factors subjective well-being depends on, how our “real self” affects us, what the concept of utility is, on which decision-making depends, how much the assessment of life affects experienced happiness, how attention and pleasure are interconnected, that we experience from something, and how much do we exaggerate the importance of what we think about? And, of course, the question of what significance the study of experienced happiness has for society does not go unnoticed.
Daniel Kahneman received the Nobel Prize in Economics in 2002. Nothing special, just one fact - Daniel has been studying psychology all his life. In particular, he is one of two researchers who, in the early 1970s, tried to destroy the fundamental paradigm of the economic sciences of that time: the myth of the man who makes archi-rational decisions, known as "Economic Man".
Unfortunately, Daniel's colleague, Amos Tversky, died in 1996 at the age of 59. Had Tversky lived, he would no doubt have shared the Nobel Prize with Kahneman, his longtime colleague and dear friend.
Human irrationality is the central point of all of Kahneman's work. In essence, his entire research path can be divided into three stages, at each of which the “irrational person” reveals himself from a new side.
At the first stage, Kahneman and Tversky conducted a series of ingenious experiments that revealed about twenty "cognitive biases" - unconscious reasoning errors that distort our judgments about the world. The most typical "": a tendency to depend on insignificant numbers. For example, in one experiment, experienced German judges showed a higher propensity to issue a long prison sentence for a shoplifter when a high number rolled on the dice.
In the second step, Kahneman and Tversky proved that people who make decisions under uncertainty do not behave in the way that economic models dictate; they do not "maximize utility". They later developed an alternative concept of process, closer to real human behavior, called "prospect theory". It was for this achievement that Kahneman received the Nobel Prize.
At the third stage of his career, after the death of Tversky, Kahneman delved into "hedonistic psychology": its nature and causes. The discoveries in this area were very extravagant - and not only because one of the key experiments included a colonoscopy (an unpleasant medical procedure during which an endoscopist examines and evaluates the condition of the inner surface of the large intestine using a special probe).
Think Slowly, Decide Fast book Thinking fast and slow) covers these three steps. This is an amazingly rich work: bright, deep, full of intellectual surprises and valuable for self-improvement. It's entertaining and touching in many ways, especially when Kahneman talks about his collaboration with Tversky ("The pleasure we got from working together made us extremely tolerant; it's much easier to strive for perfection when you're not bored for a minute") . So impressive is his vision of the failings of the human mind that New York Times columnist David Brooks recently declared that the work of Kahneman and Tversky "will be remembered hundreds of years from now" and that "it is an important foothold in man's self-knowledge of himself."
The leitmotif of the entire book is human self-confidence. All people, and especially experts, tend to exaggerate the significance of their understanding of the world - this is one of the key postulates of Kaleman. Despite all the misconceptions and illusions that he and Tversky (along with other researchers) have discovered over the past few decades, the author is in no hurry to assert the absolute irrationality of human perception and behavior.
“Most of the time we are healthy, and our actions and judgments are predominantly appropriate to the situation,” Kahneman writes in the introduction. However, a few pages later, he notes that the results of their work challenged the idea prevalent in academia that "people are generally rational." The researchers found "systematic errors in the thinking of normal people": errors that do not arise from excessive exposure to emotions, but are built into the established mechanisms of cognition.
Although Kahneman describes only modest political implications (for example, treaties should be made clearer), others (perhaps more self-confident scholars) have gone much further. Brooks, for example, argues that the works of Kahneman and Tversky illustrate the "limitations of social policy," in particular, the stupidity of the government's actions to combat unemployment and restore the economy.
Fast or logical
Such radical data is disapproved, even if it is not supported by the author. And disapproval breeds skepticism: called System 2 by Kaleman. In Kahneman's scheme, "System 2" is our slow, deliberate, analytical, and consciously purposeful way of thinking about the world. System 1, by contrast, is our fast, automatic, intuitive, and largely unconscious mode.
It is "System 1" that detects hostility in the voice and easily completes the phrase "Black and ...". And System 2 jumps right into action when we need to fill out a tax form or park a car in a narrow lot. Kahneman and others have found an easy way to explain how a person turns on System 2 during a task: just look into his eyes and notice how the pupils dilated.
In turn, "System 1" uses associations and metaphors to implement a quick and superficial view of reality, which "System 2" relies on to achieve clear beliefs and informed choices. "System 1" offers, "System 2" disposes. It turns out that "System 2" dominates? I guess, yes. But besides being selective and rational, she is also lazy. She tires quickly (the fashionable term for this is ego depletion).
Too often, instead of slowing down and analyzing things, System 2 settles for the light but unreliable vision that System 1 feeds it.
The skeptical reader may wonder how seriously all this talk about the First and Second Systems should be taken. Are they really a couple of little "agents" in our head, each with their own distinct personality? Not exactly, Kahneman says, but rather they are “useful fictions”—useful because they help explain the quirks of the human mind.
Linda is not in trouble
Consider Kahneman's "most famous and most controversial" experiment that he and Tversky did together: the "Linda problem." The participants of the experiment told about a fictional young woman named Linda, lonely, outspoken and very bright, who, as a student, was deeply concerned about issues of discrimination and social justice. Next, the participants in the experiment were asked - which option is more likely? The fact that Linda is a bank teller, or that she is a bank teller and an active participant in the feminist movement. The overwhelming majority of respondents named the second option as more likely. In other words, "feminist bank teller" was more likely than just "bank teller". This, of course, is a clear violation of the laws of probability, because every feminist teller is a bank employee; adding details can only reduce the likelihood. However, even among Stanford Business University graduate students taking advanced training in probability theory, 85% failed the Linda problem. One student noted that she made an elementary logical error, as "I thought you were just asking for my opinion."
What went wrong here? A simple question (how coherent is the narrative?) is replaced by a more complex one (how likely is this?). And this, according to Kahneman, is the source of many prejudices that infect our thinking. System 1 jumps to intuition based on "heuristics"—an easy but imperfect way of answering difficult questions—and System 2 approves of this without any extra work if it looks logical.
Kahneman describes dozens of similar experiments demonstrating failures in rationality - "basic institutional neglect", "availability cascades", "illusion of certainty", etc.
Are we really that hopeless? Think again about Linda's problem. Even the great evolutionary biologist Stephen Jay Gould was concerned about this. During the experiment described above, he knew the correct answer, but wrote that “the monkey in my head keeps jumping up and down, screaming: “She can’t just be a bank teller; read the description!”.
Kahneman is convinced that it was Gould's System 1 that gave him the wrong answer. But perhaps something less subtle is going on. Our everyday conversation takes place against a rich background of unstated expectations—what linguists call "implicature." Such implicatures can seep into psychological experiments. Given the expectations that facilitate communication, it might be reasonable for the participants in the experiment who chose the option "Linda is a bank clerk" to imply that she was not a feminist. If so, then their answers cannot be considered truly erroneous.
"Indestructible" optimism
In more natural conditions - when we discover the fact of fraud; when we talk about things instead of symbols; when we evaluate dry numbers rather than fractions, people are more likely not to make similar mistakes. At least, this is what most of the further research suggests. Perhaps we are not so irrational after all.
Some cognitive biases, of course, look gross even in the most natural settings. For example, what Kahneman calls "bad planning": a tendency to overestimate the benefits and underestimate the costs. So in 2002, when remodeling kitchens, Americans expected the work to cost an average of $18,658, but ended up paying $38,769.
Misplanning is "only one manifestation of the total optimistic bias" which "may well be the most significant of the cognitive biases." It turns out, in a certain sense, the bias towards optimism is obviously bad, because. it breeds false beliefs, such as the belief that everything is under your control, and not just a lucky coincidence. But without this "illusion of control" would we be able to get out of bed every morning?
Optimists are psychologically more resilient, have strong immune systems, and live longer on average than their realist peers. In addition, as Kahneman points out, exaggerated optimism serves as a defense against the paralyzing effect of another bias: "fear of loss": we tend to fear loss more than we value gain.
Remembering happiness
Even if we could get rid of prejudices and illusions, it is by no means a fact that this would make our life better. And here the fundamental question arises: what is the point of rationality? Our day-to-day reasoning abilities have evolved to deal effectively with complex and dynamic environments. Thus, they are more likely to be flexible to this environment, even if they are turned off in a few artificial experiments by psychologists.
Kahneman never entered into philosophical duels with the nature of rationality. He did, however, come up with an exciting suggestion as to what her goal might be: happiness. What does it mean to be happy? When Kahneman first raised this issue in the mid-1990s, most research on happiness relied on asking people how satisfied they were with their lives in general. But such hindsight estimates depend on memory, which is a highly unreliable variable. What if, instead, we sampled pleasant and painful experiences on a case-by-case basis and summarized them over time?
Kahneman calls this "experiencing" well-being, as opposed to the "remembering" well-being that researchers rely on. And he found that these two measures of happiness diverge in unexpected directions. The "Experiencing Self" does not do the same as the "Remembering Self". In particular, the Remembering Self does not care about duration—how long a pleasant or unpleasant experience lasts. Rather, it retrospectively evaluates the experience in terms of the maximum level of pain or pleasure.
In one of Kahneman's most horrifying experiments, two quirks of the Remembering Self were shown, the "continued neglect" and the "last impression rule." Two groups of patients had to undergo a painful colonoscopy. Patients in group A underwent the usual procedure. Group B patients also underwent this procedure, except for a few added minutes of discomfort during which the colonoscope was immobile. Which group suffered the most? Group B experienced all the pain experienced by group A, and much more. But since the extension of the colonoscopy in Group B was less painful than the main procedure, patients in this group were less worried, and they had little objection to the second colonoscopy.
As with colonoscopy, so with life. Not the "testing", but the "remembering I" gives instructions. The remembering self exercises "tyranny" over the experiencing self. "Strange as it may seem," writes Kahneman, "I am both the remembering self and the experiencing self, making my life unfamiliar to me."
Kahneman's radical conclusion is not so far-sighted. The 'Experiencing Self' may not exist at all. For example, brain-scanning experiments by Rafael Malach and colleagues at the Weizmann Institute in Israel have shown that when objects are absorbed into an experience, such as watching the movie The Good, the Bad, the Ugly, parts of the brain associated with self-awareness are closed ( inhibited) by the rest of the brain. The personality just seems to disappear. Then who is enjoying the movie? And why should such impersonal pleasures be the responsibility of the "remembering self"?
Obviously, there is still much to be discovered in hedonistic psychology. But Kahneman's conceptual innovations provided the basis for many of the empirical studies outlined in his work: that headaches are hedonically worse in the poor; that women who live alone earn, on average, the same as women who have a life partner; and that a family income of $75,000 in expensive regions and countries is enough to maximize the enjoyment of life.
It is traditionally assumed (and much of economics is based on this assumption) that people and firms behave rationally. That is, a person always maximizes benefit. The behavior of people, even in such seemingly weakly formalized areas as the family, religion, charity, can be very well described based on rationality.
However, in 2003, the Nobel Prize in Economics was awarded to psychologist Daniel Kahneman, who, together with his colleague Amos Tversky, showed that people are not always rational. As a result, a whole new field of research has emerged - neuroeconomics, which explores the work of the human brain at the time of making economic decisions.
Daniel Kahneman - psychologist, one of the founders of psychological (behavioral) economic theory, winner of the Nobel Prize in Economics 2002 "for the use of psychological methods in economics, in particular - in the study of the formation of judgments and decision making under uncertainty" (together with W. Smith) . Kahneman became the second "non-economist" (after the mathematician John Nash) to win the Nobel Prize in Economics. The main object of Kahneman's research is these are the mechanisms of human decision-making in a situation of uncertainty . He proved that the decisions people make significantly deviate from what is prescribed by the standard economic model homo economicus. Criticism of the model of "economic man" was engaged even before Kahneman (one can recall, for example, Nobel laureates Herbert Simon and Maurice Allais), but it was he and his colleagues who first began to systematically study psychology of decision making.
Intuition is the ability of direct, immediate comprehension of the truth without preliminary logical reasoning and without evidence.
From the dictionary of the Russian language S.I. Ozhegova: Intuition is a direct comprehension of the truth without prior logical reasoning.
In 1979, the famous article appearedProspect Theory: Analyzing Decision Making Under Risk , written by Kahneman in collaboration with psychology professor Amos Tversky (Jerusalem and Stanford Universities). The authors of this article, which marked the beginning of the so-called behavioral economics, presented the results of a huge number of experiments in which people were asked to make a choice between various alternatives. These experiments proved that people cannot rationally estimate either the magnitude of expected gains or losses, or their probabilities.
First, it was found that people react differently to equivalent (in terms of gain/loss ratio) situations depending on whether they lose or win. This phenomenon is called asymmetric response to changes in wealth. A person is afraid of loss, i.e. hisfeelings of loss and gain are not symmetrical : the degree of satisfaction of a person from acquiring, for example, $ 100 is much lower than the degree of frustration from losing the same amount. So people are willing to take risks to avoid losses, but not willing to take risks to gain . Second, experiments have shown that people tend to make mistakes when estimating probabilities : They underestimate the likelihood of events that are most likely to occur and overestimate much less likely events. Scientists have discovered an interesting pattern - even mathematics students who know the theory of probability well do not use their knowledge in real life situations, but proceed from their stereotypes, prejudices and emotions.
Instead of decision theories based on the theory of probability, D. Kahneman and A. Tversky proposed a new theory - perspective theory (prospect theory). According to this theory, a normal person is not able to correctly estimate future benefits in absolute terms, in facthe evaluates them against some generally accepted standard, seeking, above all, to avoid worsening his position. Prospect theory can be used to explain many irrational actions of people that are inexplicable from the standpoint of "economic man".
According to the Nobel Committee, having demonstrated how badly people are able to predict the future, D. Kahneman "with sufficient reason called into question the practical value of the fundamental postulates of economic theory."
It is curious to note that the American economist Vernon Smith, who was awarded the Nobel Prize in Economics at the same time as Kahneman, is his constant opponent, arguing that experimental verification basically confirms (rather than refutes) the principles of rational behavior familiar to economists. In the decision of the Nobel Committeeshare the economics prize for 2002 equally between a critic and an advocate of the rational "man of economics" model noticeable not only academic objectivity, but also a kind of irony over the situation in modern economics, whereopposite approaches enjoy about the same popularity.
Here are some interesting experiments carried out during the study.
PROBLEM ABOUT LINDA.
Students of the Faculty of Mathematics were asked to solve approximately the following problem:
Linda is a mature woman who got slapped in her thirties and the energy is rushing out of her. At her leisure, she wraps beautiful toasts no worse than the mustachioed Georgian toast makers, and at the same time she can knock over a glass of moonshine without batting an eyelid. In addition, any manifestations of discrimination infuriate her and excite demonstrations in defense of African rhinos.
Question:
Which of the two options is more likely: 1 - that Linda is a bank teller or 2 - that Linda is a bank teller and a feminist?
Over 70% of the participants in the experiment chose the second option because Linda's preliminary description matched their idea of a feminist, even though the description was irrelevant and distracting, like a silver lure with an inconspicuous pike hook. Probability students knew that the probability of a simple event occurring is greater than the probability of a composite event occurring - that is, the total number of cashiers is greater than the number of feminist cashiers. But they pecked at the lure and got hooked. (As you can see, the correct answer is 1).
Conclusion: stereotypes that dominate people easily overshadow a sober mind.
THE LAW OF THE CUP.
Imagine the following situation.
A visitor entering a cafe is greeted by a waitress with approximately the following exclamations: oh, it’s kind of cool, it came true! - finally, the thousandth visitor came to us! - and here is a solemn prize for you - a cup with a blue border! The visitor accepts the gift with a forced smile, with no overt signs of delight (and why do I need a cup? - he thinks). He orders a steak with onions and chews silently, staring blankly at the unnecessary gift and thinking to himself where to attach it. But before he can take a sip of jelly, the same waitress in an apron runs up to him and says apologetically that, they say, I'm sorry, miscalculated - it turned out that you are with us - the 999th, and the thousandth - that disabled person who entered with a club - grabs a cup and runs away shouting: who do I see! etc. Seeing such a turnover, the visitor begins to worry: uh!, uh!, EEE!!! Where are you going?! Here is the infection! - his irritation grows to the level of rage, even though he needs a cup no more than an oar.
Conclusion: the degree of satisfaction from the acquisition (cups, spoons, ladles, wife and other property) is less than the degree of grief from adequate losses. People are ready to fight for their pocket penny and are less inclined to bend down for a ruble.
Or if, say, during the negotiations no one pulled you by the tongue, and you happily promised your opponent an additional discount, then, as a rule, there is no way back - otherwise, the negotiations may reach a dead end or collapse completely. After all, a person is such that he usually takes concessions for granted, and if you change your mind, want to replay and return "everything as it was" - then he will perceive this as a shameless attempt to steal his rightful property. Therefore, plan your upcoming negotiations - clearly know what you want from them and how much. It is possible at minimal cost to make the opponent be happy like an elephant (there is a psychology of communication for this), or you can spend a lot of time, nerves and money and, as a result, remain the last fool in his eyes. Be soft on the opponent's personality and hard on the subject matter.
EMOTIONAL DISTORTIONS OF THE LAWS OF PROBABILITY.
Kahneman and Tversky, again, math students were asked to consider the following situation:
Let's say an American aircraft carrier sinks with 600 sailors on board (however, in the original condition of the problem, the hostage situation, which is unpleasant today, was considered). You have received an SOS signal and you have only two options to save them. If you choose the first option, it means that you will sail to the rescue on the fast, but small-capacity cruiser "Varyag" and save exactly 200 sailors. And if the second one, then you will sail on the squadron battleship "Prince Potemkin-Tavrichesky" (popularly - the battleship "Potemkin"), which is slow, but roomy, therefore, with a probability of 1/2, the entire crew of the aircraft carrier will either sink into the abyss, or everyone will drink champagne, in general - 50 to 50. You only have enough fuel to refuel one ship. Which of these two options for rescuing drowning people is preferable - "Varyag" or "Potemkin"?
Approximately 2/3 of the students participating in the experiment (72%) chose the option with the Varyag cruiser. When asked why they chose it, the students answered that if you sail on the Varyag, then 200 people are guaranteed to survive, and in the case of the Potemkin, perhaps everyone will die - I can’t risk all the sailors!
Then, to another group of the same students, the same task was formulated somewhat differently:
You again have two options for rescuing the aforementioned sailors. If you choose the cruiser "Varyag", then exactly 400 of them will die, and if the battleship "Potemkin" - then again, 50 to 50, that is, all or no one.
With this wording, 78% of the students have already chosen the battleship Potemkin. When asked why they did this, the following answer was usually given: in the version with the Varyag, most of the people die, while the Potemkin has a good chance of saving everyone.
As you can see, the condition of the problem has not essentially changed, just in the first case, the emphasis was placed on 200 surviving sailors, and in the second - on 400 dead - which is one and the same (remember? - what we are silent about, for the listener, as it were does not exist).
The correct solution to the problem is this. We multiply the probability of 0.5 (which is in the version with the Potemkin) by 600 sailors and get the probable number of rescued equal to 300 (and, accordingly, the same probable number of drowned). As you can see, the probable number of rescued sailors in the variant with the battleship "Potemkin" is greater (and the probable number of drowned, respectively, is less) than in the variant with the cruiser "Varyag" (300 > 200 and 300< 400). Поэтому, если отставить эмоции в сторону и решать задачу по уму, то вариант спасения на броненосце "Потёмкин" предпочтительней.
In general, as you can see, most of the participants in this experiment made decisions based on emotions - and this despite the fact that they all understood the laws of probability better than ordinary people from the street.
Conclusions: ..more than two thirds of humanity are potential patients of Professor Kahneman, because although people know a lot, they know little how to use knowledge in practice. And, again, a person is more impressed with losses than with achievements. And one more thing: understanding the theory of probability is sometimes much more useful than knowing foreign languages and accounting principles. .
For more information on interesting or unpublished experiments, see the writings of Daniel Kahneman.
The conclusion is disappointing: a person, making a decision either intuitively or emotionally, takes a big risk. And, if the first option gives him the correct, rational solution, then the second one leads to disaster. . In any case, he does not use the knowledge that he received during his life in the exact sciences. “Although people can theoretically integrate and operate with cotangents on paper, in practice in life they tend to only add and subtract and usually do not go further than multiplication-division.”
Both intuition and emotions are inherent in every person. But how to make the voice of intuition prevail when making decisions? You need to learn to understand intuition.
Now let's get back to business. Who are they - productive players in the economic market? These are the people who, at key, decisive moments, are guided simultaneously by two tools equally successfully - both iron logic and intuition! But rational thinking is not always effective.
A striking example of such a spontaneous intuitive decision can be considered the task of Henry Ford to mount an eighteen-cylinder engine into a single block. During the year, experts argued to Ford that this was from the realm of fantasy, the task was impossible. But Ford firmly insisted on solving the problem. As a result, the world received an excellent car.
Noteworthy is the insight of Steve Jobs, which was not, in principle, supported by rational evidence. Almost two dozen firms with a staff of excellent analysts and experts tried to prove him wrong. At that time, indeed, no one really needed a personal computer. And still no rational explanation has been found for the fact that personal computers began to be bought in incredible quantities... N. But the fact remains.
A person has conditionally two tools for realizing reality - "right hemisphere" and "left hemisphere" thinking, logical and intuitive consciousness. And a harmoniously developed person must masterfully master this wealth in all its volume, power and beauty, realizing that all living things are one!
For Daniel Kahneman, one of the most disturbing moments in today's global economic crisis was Alan Greenspan, the former chairman of the US Federal Reserve, admitting before a congressional committee that he believed too strongly in the ability of free markets to self-correct.
“Essentially, he said that the foundations on which he built his activities were wrong, and these words from the mouth of Greenspan make a deep impression,” says Kahneman, who received the 2002 Nobel Prize in Economics for his pioneering work on the inclusion of individual aspects of psychological research into economics.
But more significant for Kahneman was the fact that Greenspan in his speech considered as rational subjects not only individuals, but also financial institutions. “It seemed to me an ignorance not only of psychology, but also of economics. He seems to believe in the magical power of the market to ensure self-discipline and good results.”
Kahneman carefully emphasizes that, as a psychologist, he is an outsider in the realm of economics. However, he helped form the foundation for a new field of research called behavioral economics, which challenges standard rational choice economics and introduces more realistic assumptions about human judgment and decision making.
Standard economic models assume that people rationally seek to maximize their benefits and minimize their costs. And behavioral economists challenge some of the traditional tenets by showing that people often make decisions based on hunches, emotions, intuition, and rules of thumb rather than cost-benefit analysis; that the markets are infected with the disease of herd behavior and groupthink; that individual choice can often be influenced by how solutions are formulated.
Overconfidence is the driving force behind capitalism
The global economic crisis, rooted in the decisions of individuals and financial institutions to invest in subprime mortgages, has brought behavioral economics and the question of how people make decisions into the spotlight. “People who took subprime mortgages were completely deluded,” Kahneman says in an interview. F& D » in his home, located in the picturesque hills of Berkeley overlooking San Francisco. “One of the main ideas of behavioral economics, borrowed from psychology, is the widespread overconfidence. People do things they absolutely shouldn't do because they believe they can succeed." Kahneman calls this "illusory optimism."
Illusory optimism, he says, is one of the driving forces of capitalism. Many are unaware of the risks they are taking,” Kahneman says. This idea was also voiced in Nassim Taleb's book The Black Swan, which points out that people do not take into account enough the possible consequences of rare but large-scale crushing events that make our assumptions about the future wrong.
He states: “Entrepreneurs are people who take risks and, in most cases, do not know it themselves. This happens in the case of mergers and acquisitions, but also at the level of small entrepreneurs. In the United States, a third of small businesses fail within the first five years, but if you poll these people, each of them individually thinks they have an 80 to 100 percent chance of success. They just don't know."
Two sides or more
Kahneman was born in Tel Aviv in 1934 and grew up in Paris as a child and then in Palestine. He is not sure whether his vocation as a psychologist is due to an early exposure to interesting gossip or, conversely, his interest in gossip was evidence of an awakening vocation.
“Like many other Jews, I suppose I grew up in a world made entirely of people and words, and most of the words were about people. Nature was practically non-existent, and I never learned to recognize flowers or understand animals, he writes in his autobiography. But the people my mother liked to talk about with her friends and with my father were amazing in their complexity. Some of them were better than others, but the very best were far from perfect, and none were just bad. Most of her stories were told with irony, and they all had two sides, if not more."
At a fairly early age, in Nazi-occupied Paris, he had an episode that left an indelible impression in view of the many different meanings and conclusions that could be drawn regarding human nature. “It was probably the end of 1941 or the beginning of 1942. Jews were required to wear the Star of David and obey the 6pm curfew. I went to play with a Christian friend and stayed up late. I turned my brown sweater inside out so I could walk a few blocks to my house. I was walking along an empty street and saw a German soldier approaching. He wore a black uniform, which I was told to be more afraid of than uniforms of other colors, and was worn by soldiers of the special forces of the SS. I approached him, trying to walk quickly, and noticed that he was staring at me. He called me, picked me up and hugged me. I was afraid that he would notice the star on my sweater. However, he spoke to me very emotionally in German. When he put me back on the ground, he opened his wallet, showed me a photo of the boy, and gave me some money. I went home more than ever convinced that my mother was right: people are infinitely complex and interesting.”
In 1946, his family moved to Palestine, and at the Hebrew University of Jerusalem, Kahneman received his first degree in psychology, with an additional specialization in mathematics. In 1954, he was drafted into the Israeli army and after a year as a platoon leader, he was given the task of evaluating the soldiers of combat units and their leadership abilities. At that time, Kahneman developed a revolutionary system of interviews for assigning recruits to suitable positions, and this system, with only minor changes, is used to this day.
He graduated from the University of California at Berkeley in 1961 and was a lecturer at the Hebrew University from 1961 to 1978, spending his sabbaticals abroad, notably at Harvard and Cambridge. It was while working in Jerusalem that a collaboration began that would eventually lead to a Nobel Prize in a field that Kahneman had not studied, economics.
New line of research
Kahneman, currently Professor Emeritus of Psychology and Public Affairs at Princeton University's Woodrow Wilson School, received the Nobel Prize in 2002 for his work with fellow psychologist Amos Tversky. The two scientists collaborated for more than a decade, but Tversky died in 1996, and the prize is not awarded posthumously. “Amos and I were lucky to have together the goose that laid the golden eggs, a shared mind that was better than either of our minds individually,” Kahneman said of their joint work.
In presenting the award, the Nobel Committee noted that Kahneman incorporated the findings of psychology into economics, thereby laying the foundation for a new line of research. The award was given to Kahneman jointly with Vernon Smith, who created the foundations for a separate field of experimental economics.
Kahneman's main discoveries concern decision making under uncertainty. He demonstrated how human decisions can systematically fall short of the predictions of standard economic theory. Together with Tversky, he formulated "prospect theory" as an alternative that better explains the observed behavior. Kahneman also discovered that human judgments can be based on intuitive breakthroughs that systematically deviate from basic principles of probability. "His work has inspired a new generation of researchers in economics and finance to enrich economic theory by taking advantage of cognitive psychology's insights into deep human motivation," the Nobel Committee said in a statement.
Prospect theory helps to explain experimental evidence that people often make different decisions in situations that are essentially identical but presented in different ways. The article by these two authors became the second most cited article published in the prestigious scientific economic journal Econometrica in the period 1979-2000 ( Kahneman and Tversky , 1979). This research has influenced a wide variety of disciplines, including marketing, finance, and consumer choice theory.
Kahneman says that one should not look for special meaning in the name of the theory. “When we were ready to submit the work for publication, we deliberately chose the meaningless name for our theory “prospect theory”. We assumed that if the theory ever gained publicity, an unusual name would do the trick. It was probably the smart decision."
Kahneman and Tversky's collaborative research explores why the human response to loss is significantly stronger than the response to gain, and this has led to the concept of loss aversion, which is one of the main areas of research in behavioral economics.
The two psychologists also found empirically that people assign less weight in their decision making to outcomes that are only probable than outcomes that are certain. This tendency leads to risk aversion in cases of almost certain gains and to risk taking in cases of almost certain losses. This can explain the behavior of a player who loses many times in a row and yet refuses to accept his apparent losses and continues to play in the hope of getting his money back.
“People are willing to bet on getting back what they’ve lost,” Kahneman said in a radio interview at Berkeley in 2007. This made him worried that the leaders of the state, who brought the country to the brink of defeat in the war, were more likely to take additional risks than to stop hostilities.
The co-authors also found that people exhibit inconsistent preferences when the same option is presented to them in different forms. This helps to explain non-rational economic behavior, such as people traveling to a distant store to take advantage of a discount on a cheap item but not doing the same to get a discount on an expensive item.
Creation of a new discipline
The way in which prospect theory has found its application to economics appears to be almost a coincidence associated with publication. Kahneman and Tversky decided to publish an article in the magazine Econometrica, not in PsychologicalReview , because the first published their earlier work on decision making, which brought their research to the attention of economists.
Kahneman says his collaboration with longtime research partner and friend Richard Thaler, a professor of economics and behavioral science at the University of Chicago, contributed to the development of behavioral economics. “Although I do not deny my credit, I must say that, in my opinion, the work of integration was actually done mainly by Thaler and a group of young economists who began to quickly form around him, starting with Colin Camerer and George Lowenstein, to whom then Matthew Rabin, David Leibson, Terry Odean and Sendhil Maleinathan joined."
Kahneman says that he and Tversky offered "quite a few initial ideas that later became part of the theoretical developments of some economists, and prospect theory certainly gave some legitimacy to the reliance on psychology as a source of realistic assumptions about economic actors." Thaler, who was a regular contributor to the "Anomalies" column in the magazine JournalofEconomicPerspectives between 1987 and 1990, and periodically wrote in this column and subsequently, says that it is thanks to the joint work of Kahneman and Tversky that today we have a thriving direction of behavioral economics. “Their work became the conceptual framework that made our field of science possible.”
The push created by the crisis
The buzz created by the Nobel Prize, coupled with introspection by economists sobered by the global economic crisis, created a strong push for the spread of behavioral economics. So strong that it began to infiltrate today's White House through books such as The Push to Make the Right Choice. Nudge "") (Thaler and Sunstein) and "Predictably irrational" (" Predictably Irrational ”) by Duke University professor Dan Ariely.
The Push to Make Good Choices explores how people make choices and how they can be nudged to make better choices for themselves across a range of issues, such as buying healthy food or choosing to put more money into savings. "It's clear that this is a good time for behavioral economics," Kahneman says with a smile.
Not everyone agrees that behavioral economics is the future, seeing it as a passing and annoying fad. “Of course, today everyone is obsessed with behavioral economics. The casual reader might get the impression that the rational homoeconomicus died a sad death, and economists went ahead and recognized the true irrationality of the irrationality of mankind. Nothing could be further from the truth,” says David Levin of Washington University in St. Louis.
“Behavioral economists are right to point out the limitations of human cognition,” says Richard Posner of the University of Chicago Law School. But if they have the same cognitive limitations as consumers, should they develop consumer protection systems?”
“Perhaps the biggest challenge facing behavioral economics is to demonstrate its applicability in the real world,” write Steven Levitt and John List in an article published in the journal Science (2008). In almost all cases, laboratory studies reveal strong empirical evidence for behavioral abnormalities. However, there are many reasons to suspect that these laboratory results may not be of such a general nature as to be true for real markets.”
Place in the economy
Although behavioral economics is now an established discipline taught at leading universities, “it remains a discipline that builds on the shortcomings of standard economics,” says Wolfgang Pesendorfer, professor of economics at Princeton University.
However, its full integration into economics proves difficult, although Wall Street and investment analysts take into account the cognitive and emotional factors that affect the decision-making process of people, groups and organizations. “There are too many theories of behavior, and most of them have too narrow application,” writes Drew Fudenberg of Harvard University in his article.
In the eyes of some, even perspective theory remains flawed in the absence of a generally accepted model for how points of reference are set. “The fundamental difference between psychologists and economists is that psychologists are interested in individual behavior, while economists are interested in explaining the results of the interaction of groups of people,” says David Levin in a lecture given at the European University Institute entitled “Is Behavioral Economics Doomed?”.
Growth of trust
However, the turmoil caused by the collapse of the subprime mortgage market and the subsequent global crisis has led to increased confidence in the need for more human input in regulation and economic policy. Kahneman offers a range of conclusions from the current crisis.
Need for greater consumer and individual investor protection. “There has always been a question about the need and the extent to which people are required to be protected from their own choices,” he says. But I think it’s become very, very difficult now to say that people don’t need protection.”
The shortcomings of market mechanisms have much broader implications. “Interestingly enough, it turns out that when misinformed individuals lose their money, it leads to the collapse of the global economy. Accordingly, the irrational actions of individuals have much broader implications in the context of rationally malicious actors in the financial system and extremely weak regulation and oversight.”
♦ Limited forecasting capabilities. "Extremely high volatility in the stock markets and in the financial system is indicative of the level of uncertainty in the system and limited predictive power."
Greenspan appears to agree that there are flaws in the models used to predict and assess risk. In an article published in financial times Last March, Greenspan compared human nature to a lost piece of the puzzle that makes it impossible to explain why the spreading subprime mortgage crisis was not identified sooner by risk management or econometric forecasting models.
“These models do not fully take into account what, in my opinion, has so far been only a marginal factor for business cycle and financial models, the natural human reaction that leads to sharp alternations of euphoria and fright, repeated from generation to generation with little or no there were no signs of accumulation of knowledge, writes Greenspan. Asset Price Bubbles Are Rising And Popping Today, Just Like They Did From The Beginning XVIII century, when modern competitive markets emerged. Of course, we tend to call such a behavioral response irrational. However, for forecasting, what should be important is not whether a human reaction is rational or irrational, but only its observability and systematicity. "In my opinion, this is an important missing 'explanatory variable' in both risk management and macroeconometric models."
Reflections on thinking
In addition to the Nobel Prize in Economics, Kahneman was recognized as one of the largest scientists in the field of psychology. "Kahneman, his colleagues and students have changed the way we think about how people think," said Sharon Stephens, president of the American Psychological Association, when Kahneman was presented with the highest award in the field in 2007 "for a lifetime of outstanding contributions to psychology." Kahneman continues to closely monitor the development of behavioral economics, but he himself has long been occupied with other issues. Today, his focus has shifted to the study of well-being, and he is collaborating with Gallup to conduct a worldwide survey to quantify global issues and opinions in more than 150 countries.
Challenge to the clergy
In the past, Kahneman compared the economics community to a clergy that is difficult for heretics to enter. But he acknowledges how far economics has advanced over the past three decades in incorporating the results of psychological research and elements of other social sciences. We have published our article in the journal Econometrica in 1979, that is 30 years ago. In 2002, I was received with honors in Stockholm. So it's not a very strict church, given that for the first few years the economists ignored us for the most part. Yes, I was talking about the church, but this is not a church where you will be burned at the stake for heresy, otherwise we would have missed so many!”
