woensdag, oktober 19, 2011

We use our brain NOT to think

Since I read Stuart Sutherlands 1992 (!)book "Irrationality" I felt incomfortable about how we ineffectively we use our intelligence.

Well... It got worse since. There seems no hope for improvement. Biology forbids. Just maybe we can build machines smarter then us to make the right decisions for us. Because we fail. Terribly.

(Ah we already have them. But we do not like using them, do we)

Amplify’d from www.wallstreetjournal.com

Here's a simple arithmetic question: "A bat and ball cost $1.10. The bat costs $1 more than the ball. How much does the ball cost?"

The vast majority of people respond quickly and confidently, insisting the ball costs 10 cents. This answer is both incredibly obvious and utterly wrong. (The correct answer is five cents for the ball and $1.05 for the bat.) What's most impressive is that education doesn't really help; more than 50% of students at Harvard, Princeton and the Massachusetts Institute of Technology routinely give the incorrect answer.

The Science of Irrationality

A Nobelist explains our fondness for not thinking

When people face an uncertain situation, they don't carefully evaluate the information or look up relevant statistics. Instead, their decisions depend on mental short cuts, which often lead them to make foolish decisions. The short cuts aren't a faster way of doing the math; they're a way of skipping the math altogether.

In Mr. Kahneman's important new book, "Thinking, Fast and Slow," his first work for a popular audience, he outlines the implications of this new model of cognition. What are the most important mental errors that we all make? And can they be overcome?

This shouldn't be too surprising. The stock market is a case study in randomness, a system so complex that it's impossible to predict. Nevertheless, professional investors routinely believe that they can see what others can't. The end result is that they make far too many trades, with costly consequences.

What's even more upsetting is that these habits are virtually impossible to fix. As Mr. Kahneman himself admits, "My intuitive thinking is just as prone to overconfidence, extreme predictions and the planning fallacy as it was before I made a study of these issues."

Read more at www.wallstreetjournal.com

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