"THE ART OF THINKING CLEARLY” from ROLF DOBELLI (Book Review)

This is a book which has impacted me a lot.

Makes us reflect that we, as human beings, are exposed to mental mistakes/bias based upon our ancestors´ heritage, our mammal origin, our gens/DNA, background, family experiences, education, … and put a clear reality to the quote “we as humans commit mistakes”.

Is the previous phase to the decision-making process when we can take into consideration all these lessons that Mr Dobelli has studied deeply and adds scientific studies that prove all of them.

For almost every situation that we can face, there is a bias that we should reflect upon and an action that make us avoid “human failures” to prevent us from ourselves.

For each Bias I have suggested an action to prevent/correct it.

Enjoy them...and live/experience them too...I am sure all of us have lived them in first person.

1.-The Survival Bias (Survivorship Bias):

As successes generate greater visibility on a day-to-day basis than failures, the prospect of success is systematically overestimated

ACTION: Visiting the cemeteries of the losers

2.- The illusion of the swimbody (Swimmer's body illusion):

The consequence of swimming is not a swimmer's body. It is their physical constitution, a selection criterion, not a result of their activity.

We confuse the selection criterion with the result.

Happiness is largely innate and remains constant throughout life.

You be honest with yourself before following advice from which to recommend something of value.

Look in the mirror.

Self-help books are written by people who are prone to luck, their advice doesn't work on others who don't.

3.- the effect of overconfidence: Because it systematically overestimates your knowledge and skills

We consistently over-estimate our knowledge and capabilities to forecast.

It dispenses with the difference between what people know and what you think they know

Overconfidence is not incentivized, it is naive, naturally innate.

1.-An effect of lack of confidence does not exist

2.- It is greater in men than in women

3.- Affects optimists and pessimists the same

ACTION – be skeptical of all predictions, especially from experts

Always start from the most pessimistic perspective on realism

4.- the social proof: If millions of people claim a foolishness it won't come true

Gregariousness: I behave properly if I behave like the others

The more people who find an idea right, the more correct that idea is

The pressure of a group bends common sense.

It's an animal reminiscence of survival

5.- the fallacy of the unrecoverable cost (SINK COST FALACY)

Ignore the past

The more we invest in a project, the harder it will be to abandon it

Example on the stock exchange: the purchase price should not influence the decision to sell a stock, but the prospect of its future evolution

No matter what I've already invested, it only counts the now and its estimate of the future.

6.- Reciprocity: Why you shouldn't let yourself be invited to a Cup

Human beings can hardly bear to be in debt

First it is given away and then it is claimed

Reciprocity could also be called corruption

It's also risk management

Without reciprocity humanity would have become extinct

There is an unpleasant side of reciprocity , revenge, against revenge, war

Reciprocity is part of the human survival program

7.- Confirmation bias (1st part): CONFIRMATION BIAS

Be careful when dropping the words "Special Case"

Tendency to interpret new information in a way that is compatible with theories, ideologies, convictions, ... we already have

We rule out new information that contradicts our previous views

(2nd part) - Kill your lovers

Look for rebuttal evidence to your convictions

We move in communities of alike that reinforce the bias of confirmation

Write down the dogmas and look for refuting evidence

8.- the bias of authority:Por what shouldbe disrespectful to the authority

The authority poses two problems:

1.-Balance of results that it is often disillusioned: Train to eliminate the bias of authority 2.- In the presence of the authority we go back independent thinking. Challenge the expert, you will feel freer to trust yourself

9.- The contrast effect: Why should leave at home her model friend

We find it difficult to make absolute valuations when there is a comparison

Inconvenient: we do not perceive small gradual changes and relate the absolute because we compare it to something else.

10.- availability bias : Why use a false plan before none

We create an image of the World based on us coming up with more examples

Things don't happen more often just because we can imagine it better

We give the loud and shrill more likely than the silent and invisible

We always use reliable recipes first to get, without delving

ACTION - Meet people who think differently from you with different experience

11 The Trap Will Get Worse Before Death: There is No Painful Way

Variant of the confirmation bias: because if it happens, it is foreseen and if not, I am glad.

12.- The story bias: Why even real stories lie

We build the sense of things later inward

Stories misrepresent and simplify reality and set aside everything that doesn't fit well and where relevant aspects lose value in favor of irrelevant

Our brain wants example stories advertising (e.g. Google ' Parisian Love)

https://www.youtube.com/watch?v=nnsSUqgkDwU

We disfigure reality with pampered stories by diminishing our quality of decisions

ask what you want to hide the story

13.- The prejudice of hindsight: Why should I write a diary (Hindsight Bias)

https://en.wikipedia.org/wiki/Hindsight_bias

In retrospect, everything seems to derive from a reasonable need

It makes us believe that we forecast and that we are much better than we really are

ACTION - Keep a diary write down your and the press forecasts

14.- The wisdom of the driver: Why you can't take the news anchor seriously

2 forms of knowledge:

-Authentic: the fruit of time and intellectual work

-The Driver: Eloquent and Bottomless

Communicative competence is valued more than knowledge

"Circle of competence" within the circle - Professional

Stay within the Circle of your own competition

Be wary of driver's knowledge: true sages outside your Circle of Competition: either they shut up or they say "I don't know"

15.- The illusion of control: you have fewer things under control than you think

We believe that we can influence something that objectively escapes our control

Focus on the few things you can influence

The placebo button not connected to the effect

16.- the super response incentive trend : Why shouldn't you pay your lawyer by the hour

Incentive super-tendenc responsey

People react to incentive schemes and react in their own interests

1.- Rapidity-radicalism: what people change their behavior when incentives enter games or vary

2.-People react to incentives but not to the purpose behind incentives

The incentive system must be connected to the target

Hourly pay lawyers is from idiots with come a price upfront

17.- regression to the mean: The dubious effectiveness of medical advisors

"Regression toward the mean"

Trend of all results to meet the average: bad and good without an effect on corrective measures

18.- the ease of dula: why sensible people do not appeal to common sense

In everything that use falls on the individual, but the cost in the community clashes with the system's regeneration capacity limit, we cannot count on the ethical common sense of people

Only the privatization of management works

19.- the bias of the result: I never valued a decision based on the outcome

"Nice stay"

Trend valued decisions based on outcome rather than on decision-making process

Historian's mistake

The bias of the result is aggravated if the sample is very small

You value why a decision is made and its process more than the result

20.- the paradox of abundance: Why more is less

"Paradox of Choice "

1.- A great variety leads to internal paralysis in the face of a great offer as the customer cannot decide

2.- A great variety leads to bad decisions

3.- A great variety lead to dissatisfaction after the election for the lack of security in the success

ACTION - Think what you want before examining the existing offer, write down criteria and know that before the big offer the choice is not going to be perfect

Good enough is the best

21.- the bias of please: We behave foolishly because we want to please

Nothing works better than making the customer believe they really appreciate it

"Liking Bias"

The better I like someone more willing we are to buy or help

The closer we are to ourselves the better

Using the reflection to achieve the same effect on them

Multi-Level Marketing - Tupperware - Sell Through Friendships

ACTION - alore and a business regardless of the other side

22.- the endowment effect:Nor cling to things

"Endowment effect"

What we own is worth more than we don't own.

If we own something, we ask for more than we would be willing to pay for the same thing

We give things an emotional value

Dareing costs us more than accumulating

ACTION - Don't hold on to your possessions consider them a provisional benefit of the universe

23.- The Miracle: The need for incredible events

The unlikely things are just that, rare but possible events

It's not impossible for them to happen, they ever happen

24.- Groupthinking: Why consensus can be dangerous

Group Thinking - Group Thinking

Group consensus that no individual would have independently reached

A spirit of body develops in which illusions are built

No one wants to be a party pooper that ruins unanimity

ACTION - Don't mind being the devil's lawyer, the group is not a global opinion

25.- neglect of probability: Why prizes always increase

We react to the expected dimension of an event ... but not at his likelihood

"Neglect of probability"

We see more of the outcome than the probability of it happening

26.- Risk Bias Zero - Zero Risk Bias - Why you pay too much for zero risk

We tend to eliminate the risk rather than dramatically reduce it

We distinguish with difficulties between risks unless the risk is zero

Risks are difficult to estimate

The more serious the risk, the less we are reassured by the reduction in risk

Say goodbye to the idea of risk 0 is often too expensive

ACTION - Learn to live that there's nothing 100 times 100 safe

27.- the mistake of scarcity: Why scarce biscuits taste better

"Rare sunt face"

Reactance takes away an option and we overestimate it

Our typical reaction the scarcity is the loss of clear thinking

ACTION - Let's value things objectively based on their price/utility

28.-the dismissal of the previous odds: If you hear a gallop in Wyoming and think you see black and white stripes ...

The previous description induces us to look away from the statistics

"Base rateneglect":neglect of the base distribution

ACTION - Be consistent with the rigorous calculation of probability to make decisions

29.- Player fallacy: Porque there is no force of compensatory destiny

"Gamblers'falacy"

In Independent Events there is no compensatory force

Complex feedback ensures that extreme values are balanced

Notice if you are facing dependent or independent events (most are dependent).

ACTION - Forget (less in cases of regression to the mean) of the force of compensatory destiny

30.- The Anchor: How a Ferris wheel makes us lose our minds

Whenever we make estimates we use an anchor (actual data on which to make a hypothesis) We also nail anchors where they are not held

An anchor serves as bait for offers (a similar price a price before the offer)

31.-Induction: How to remove people from their millions.

We all tend to deduce general certainties from isolated observations

A single opposite observation is enough to sweep away thousands of confirmatory theories

We need induction but without forgetting that certainties are only provisional

32.- Aversion to loss: Why angry faces attract more attention than the kind ones

The Lows outperform the highs

We are descendants of the survivors... the risky died

A loss weighs twice as much as an equal gain

We react more sensitively to negative things than positive things

33.- social laziness: Why teams are lazy

"Social Loafing"

Single-individual 100... 2o 93... 3 x 85....8 x 49

Appears when an individual's performance is not visible but is diluted in a group

In meetings, the greater the number, the group has less participation

We hide performance and responsibility (dissemination of responsibility), so groups tend to accept greater risks than individuals ("Ricky shift")

People behave in different groups so they're alone

ACTION - Gives visibility to individual yields when you work in a group - meritocracy

34.- Exponentialgrowth: Why a folded leaf surpasses our thinking

Linear growth is quickly intuited... the exponential costs us

Trick - Duplication Time - 7 percent growth takes 10 years to double

ACTION - Don't trust your impression use the calculator

35.- The Winner's Curse: "WINNERS CURSE": How Much You Would Pay for $1

Danger the Winner's Curse - Pyrrhic Victory

In most mergers value is lost (M&A) due to overestimation of efficiencies and therefore an overprice is paid

ACTION - I never participated in auctions and if there is no choice, put price and remove -20% and do not move from there

36.- The Fundamental Error of Attribution: I never asked a writer for his autobiographical novel

The bias of correspondence tends to systematically overestimate people's influence and underestimate external and situational factors when it comes to explaining something (especially in negative events)

Admiration for others belongs to our evolutionary past

ACTION - I paid no attention to the performer but to the work

37.- The false chance: Why shouldn't I believe in the stork

Confusion between cause and effect

The relationship is no coincidence - Notice well sometimes the arrow of the effect is different in the opposite direction or non-existent

38.- The Halo Effect: Why Beautiful People Make Racing Easier

We let ourselves be dazzled by the look and from there we deduce the whole

A single quality of a person offers a positive or negative image in everything else

The halo effect stays in the subconscious

If that effect of Halo affects the origin race gender then it is stereotyping

It blocks us from the vision of true qualities

39.- Alternative routes: Congratulations has won Russian roulette

Everything that could equally have come true but it hasn't.

You can't see that's why we think little of them

Risk is not seen directly

"Life has been full of misfortunes that most didn't come true of."

40.- the illusion of the prognosis: How the glass ball deforms its view

Be critical of forecasts: Forecasters are prophets without punishment or reward

41.- The fallacy of the conjunction: Why plausible stories manage to seduce

"Conjuntion falacy"

We have an intuitive understanding for coherent and compelling stories, the rest of the possibilities don't come to our minds in the face of a coherent story

2 types of thinking:

1.- Intuitive direct automatic . . . faster

2.- Conscious, rational, slow, laborious, logical

ACTION – Prevent intuitive thinking from acting before the conscious and leading you to error

42.- Framing:"C'est le ton qui fait la musique (What music does is the sound )

The same case brought in one form or another comes differently ("Framing")

Idealization is a variant in the framing

Nothing can be discovered without framing with the work

43.-Action bias : Why it is a pain to wait without doing anything ("Action bias")

It tends to be in new and unclear situations

Activity counts more than reflection

Rigorous reflection compensates for action and activity

ACTION - In unclear situations, consider yourself better

44.- the omission bias: Why are you the problem or the solution ("Omission bias")

Between action and omission in the second case the damage appears to be harmless

The intentional omission we see is less bad than an active reprehensible act

Future damage can be prevented by acting today, but preventing it does not motivate us enough

"If you're not part of the solution, you're part of the problem."

45.- self-service bias: Why you are never to blame ("Self-service bias")

Success is attributed to oneself, while failure to external factors

The cause is not to harm us and tolerate failure

We are permanently overrated in our role

ACTION - Ask for feedback from who you know you're going to give it to, honestly

46.- the hedonic adaptation: Why you should keep your way to work

"Hedonic treadmill"

Growth in wealth and status dissipates in the short term:

1.- Avoid negative effects that you haven't adapted to in a short time

2.- Expect a short effect on the time of material things

3.- The longer lasting effects have more value: the importance of what time is devoted to

47.- self-selection bias: Don't be surprised that you exist

"Self Selection bias"

Keep an eye out for the result of a data to be based on its essential compliance

48.- Association bias: Why sometimes the silly experience

"Assotiation bias"

Paulov's dogs: related things that have nothing to do with

We don't like bearers of bad news " Shoot the Messenger"

We must draw from an experience as much wisdom as it contains, no more

49.- The beginner's luck: Be careful if at first everything goes well

Success not related to skill, but to lack of normalization

-Wait longer to assess your skills

-The more participants are more likely to have luck longer

Keep your assessment waiting to test your assumptions and try to refute them

50.- Cognitive dissonance: How to tidy up your feelings with little lies

Cognitive dissonance or dissolution turning your intentions later to deceive yourself about your true purpose

Fable of fox and grapes

51.- the hyperbolic discount: "Carpe diem"... But please only on Sunday

Immediacy is very valuable to us

"Hyperbolic discounting"

Our emotional interest rate grows the closer to the present is a decision

"Marshmallow test "

We must gain power over our impulses

EPILOGUE:

Reason taints feelings

Thought is not pure but given to errors of logic

Intuitive behavior is harmful in the modern world

Heuristics - mental shortcuts golden rules when information is missing

We often intuitively decide to justify our decisions later

Intuitive comprehension or mastery competition circle

The human mind functions like an egg ....closes when it is inseminated by an idea

Ikea effect: the more work we invest in something stronger the feeling of possession

Activity counts more than reflection (before)

conclusion:

-As human beings we are coding to make logic errors that are in our genes fostered by our evolution.

-Knowing these errors can help us correct them and apply actions that minimize or correct them

Example:

"During World War II, in an attempt to reduce the number of aircraft shot down by the enemy, the Allies studied where returning aircraft were most damaged. In this way, they could reinforce those parts.

The bottom line: reinforce the tips of the wings, rudders and the center of the plane, which was where they saw the most impacts.

But Abraham Wald, a statistician working for defense, proposed something different: reinforcing the cockpit, engines and the back of the body.

And why reinforce those areas where there were no impacts?

What they hadn't considered was that there was an important bias when doing the study. They were just watching the planes that managed to return.

Wald assumed that the distribution of impacts would be more or less homogeneous.

They saw impacts on areas that weren't vital.

Because despite being heavily damaged, the planes managed to get back to base.

If an aircraft was damaged in the cockpit, engines and tail, it was shot down.

Because they could not return to base, they were not considered in the studio.

This phenomenon is something that in statistics we call "selection bias".

Often misunderstood data or "intuition" leads us to make wrong decisions.

We have to invest in reliable information, it's our main resource