Daniel Kahneman on Information and Biases
In this week’s Masters in Business podcast, we chat with Danny Kahneman, behavioral and cognitive psychologist and winner of the 2002 Nobel Memorial Prize in Economic Sciences. He is also the author of the highly regarded "Thinking, Fast and Slow."
Kahneman discusses how he met Amos Tversky, who became his longtime research partner. He notes “we” won the Nobel Prize, referring to his sharing of the honor with Tversky, who died before the prize was awarded (it is not awarded posthumously).
Kahneman explains how he and Tversky first discovered the heuristics of representativeness, availability and anchoring. He tells why going first in a negotiation is -- contrary to popular opinion -- a huge advantage, as the human brain tries to make sense of the number it receives, regardless of how ridiculous it may be.
The availability heuristic -- “WYSIATI,” or what you see is all there is -- reveals how people are unaware of what they do not know, and use whatever limited information may be available to create a coherent narrative, even when there is none. Hence, “availability bias” allows people to use what looks to be salient info to fabricate narratives that seem to make sense.
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