The Art of Thinking Clearly.md

The Art of Thinking Clearly by Rolf Dobelli

1: Why You Should Visit Cemeteries: Survivorship Bias

• Survivorship bias means this: People systematically overestimate their chances of success. Guard against it by frequently visiting the graves of once-promising projects, investments, and careers. It is a sad walk but one that should clear your mind.

2: Does Harvard Make You Smarter?: Swimmer’s Body Illusion

• Be wary when you are encouraged to strive for certain things—be it abs of steel, immaculate looks, a higher income, a long life, a particular demeanor, or happiness. You might fall prey to the swimmer’s body illusion. Before you decide to take the plunge, look in the mirror—and be honest about what you see.

3: Why You See Shapes in the Clouds: Clustering Illusion

• When it comes to pattern recognition, we are oversensitive. Regain your skepticism. If you think you have discovered a pattern, first consider it pure chance. If it seems too good to be true, find a mathematician and have the data tested statistically. And if the crispy parts of your pancake start to look a lot like Jesus’s face, ask yourself: If he really wants to reveal himself, why doesn’t he do it in Times Square or on CNN?

4: If Fifty Million People Say Something Foolish, It Is Still Foolish: Social Proof

• be skeptical whenever a company claims its product is better because it is “the most popular.” How is a product better simply because it sells the most units? And remember English novelist W. Somerset Maugham’s wise words: “If fifty million people say something foolish, it is still foolish.

5: Why You Should Forget the Past: Sunk Cost Fallacy

• The sunk cost fallacy is most dangerous when we have invested a lot of time, money, energy, or love in something. This investment becomes a reason to carry on, even if we are dealing with a lost cause. The more we invest, the greater the sunk costs are, and the greater the urge to continue becomes.
• No matter how much you have already invested, only your assessment of the future costs and benefits counts.

6: Don’t Accept Free Drinks: Reciprocity

• Reciprocity is a very useful survival strategy, a form of risk management. Without it, humanity—and countless species of animals—would be long extinct. It is at the core of cooperation between people (who are not related) and a necessary ingredient for economic growth and wealth creation.
• But there is also an ugly side of reciprocity: retaliation. Revenge breeds counter-revenge, and you soon find yourself in a full-scale war.

7: Beware the “Special Case”: Confirmation Bias (Part 1)

• confirmation bias is the mother of all misconceptions. It is the tendency to interpret new information so that it becomes compatible with our existing theories, beliefs, and convictions. In other words, we filter out any new information that contradicts our existing views (“disconfirming evidence”).
• “Facts do not cease to exist because they are ignored,”
• “What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.”

8: Murder Your Darlings: Confirmation Bias (Part 2)

• Religious and philosophical beliefs represent an excellent breeding ground for the confirmation bias.
• example, worshippers always find evidence for God’s existence, even though he never shows himself overtly—except to illiterates in the desert and in isolated mountain villages. It is never to the masses in, say, Frankfurt or New York. Counterarguments are dismissed by the faithful, demonstrating just how powerful the confirmation bias is.
• To fight against the confirmation bias, try writing down your beliefs—whether in terms of worldview, investments, marriage, health care, diet, career strategies—and set out to find disconfirming evidence. Axing beliefs that feel like old friends is hard work but imperative.

9: Don’t Bow to Authority: Authority Bias

• Whenever you are about to make a decision, think about which authority figures might be exerting an influence on your reasoning. And when you encounter one in the flesh, do your best to challenge him or her.

10: Leave Your Supermodel Friends at Home: Contrast Effect

• the contrast effect: We judge something to be beautiful, expensive, or large if we have something ugly, cheap, or small in front of us. We have difficulty with absolute judgments.

11: Why We Prefer a Wrong Map to None at All: Availability Bias

• availability bias says this: We create a picture of the world using the examples that most easily come to mind. This is idiotic, of course, because in reality, things don’t happen more frequently just because we can conceive of them more easily
• people prefer information that is easy to obtain, be it economic data or recipes. They make decisions based on this information rather than on more relevant but harder-to-obtain information
• We require others’ input to overcome the availability bias.

12: Why “No Pain, No Gain” Should Set Alarm Bells Ringing: The It’ll-Get-Worse-Before-It-Gets-Better Fallacy

• the it’ll-get-worse-before-it-gets-better fallacy is a variant of the so-called confirmation bias. If the problem continues to worsen, the prediction is confirmed.

13: Even True Stories Are Fairy Tales: Story Bias

• Stories are dubious entities. They simplify and distort reality and filter things that don’t fit. But apparently we cannot do without them. Why remains unclear. What is clear is that people first used stories to explain the world, before they began to think scientifically, making mythology older than philosophy. This has led to the story bias.

14: Why You Should Keep a Diary: Hindsight Bias

• hindsight bias so perilous? Well, it makes us believe we are better predictors than we actually are, causing us to be arrogant about our knowledge and consequently to take too much risk

15: Why You Systematically Overestimate Your Knowledge and Abilities: Overconfidence Effect

• We systematically overestimate our knowledge and our ability to predict—on a massive scale.
• it measures the difference between what people really know and what they think they know.
• Be aware that you tend to overestimate your knowledge. Be skeptical of predictions, especially if they come from so-called experts. And with all plans, favor the pessimistic scenario. This way, you have a chance of judging the situation somewhat realistically.

16: Don’t Take News Anchors Seriously: Chauffeur Knowledge

• True experts recognize the limits of what they know and what they do not know. If they find themselves outside their circle of competence, they keep quiet or simply say, “I don’t know.” This they utter unapologetically, even with a certain pride.

17: You Control Less Than You Think: Illusion of Control

• The illusion of control is the tendency to believe that we can influence something over which we have absolutely no sway.
• focus on the few things of importance that you can really influence. For everything else: Que sera, sera.

18: Never Pay Your Lawyer by the Hour: Incentive Super-Response Tendency

• People respond to incentives by doing what is in their best interests.
• Keep an eye out for the incentive super-response tendency. If a person’s or an organization’s behavior confounds you, ask yourself what incentive might lie behind it. I guarantee you that you’ll be able to explain 90 percent of the cases this way. What makes up the remaining 10 percent? Passion, idiocy, psychosis, or malice

19: The Dubious Efficacy of Doctors, Consultants, and Psychotherapists: Regression to Mean

• the regression-to-mean delusion.
• Extreme performances are interspersed with less extreme ones.

20: Never Judge a Decision by Its Outcome: Outcome Bias

• outcome bias: We tend to evaluate decisions based on the result rather than on the decision process. This fallacy is also known as the “historian error.
• Never judge a decision purely by its result, especially when randomness and “external factors” play a role. A bad result does not automatically indicate a bad decision and vice versa.
• remember why you chose what you did. Were your reasons rational and understandable?

21: Less Is More: Paradox of Choice

• abundance makes you giddy, but there is a limit. When it is exceeded, a surfeit of choices destroys quality of life. The technical term for this is the paradox of choice.
• How can you be sure you are making the right choice when two hundred options surround and confound you? The answer is: You cannot. The more choice you have, the more unsure and therefore dissatisfied you are afterward.
• So what can you do? Think carefully about what you want before you inspect existing offers. Write down these criteria and stick to them rigidly. Also, realize that you can never make a perfect decision.

22: You Like Me, You Really, Really Like Me: Liking Bias

• Amiability works better than bribery.” So, if you are a salesperson, make buyers think you like them, even if this means outright flattery. And if you are a consumer, always judge a product independent of who is selling it. Banish the salespeople from your mind or, rather, pretend you don’t like them.

23: Don’t Cling to Things: Endowment Effect

• endowment effect. We consider things to be more valuable the moment we own them. In other words, if we are selling something, we charge more for it than what we ourselves would be willing to spend.
• Don’t cling to things. Consider your property something that the “universe” (whatever you believe this to be) has bestowed to you temporarily. Keep in mind that it can recoup this (or more) in the blink of an eye.

24: The Inevitability of Unlikely Events: Coincidence

• Let’s not get too excited. Improbable coincidences are precisely that: rare but very possible events. It’s not surprising when they finally happen. What would be more surprising is if they never came to be.

25: The Calamity of Conformity: Groupthink

• If you ever find yourself in a tight, unanimous group, you must speak your mind, even if your team does not like it. Question tacit assumptions, even if you risk expulsion from the warm nest. And, if you lead a group, appoint someone as devil’s advocate. She will not be the most popular member of the team, but she might be the most important.

26: Why You’ll Soon Be Playing Mega Trillions: Neglect of Probability

• we respond to the expected magnitude of an event (the size of the jackpot or the amount of electricity), but not to its likelihood. In other words: We lack an intuitive grasp of probability
• We have no intuitive grasp of risk and thus distinguish poorly among different threats. The more serious the threat and the more emotional the topic (such as radioactivity), the less reassuring a reduction in risk seems to us.
• people are equally afraid of a 99 percent chance as they are of a 1 percent chance of contamination by toxic chemicals. An irrational response, but a common one.

27: Why the Last Cookie in the Jar Makes Your Mouth Water: Scarcity Error

• When we are deprived of an option, we suddenly deem it more attractive. It is a kind of act of defiance.
• The typical response to scarcity is a lapse in clear thinking. Assess products and services solely on the basis of their price and benefits.

28: When You Hear Hoofbeats, Don’t Expect a Zebra: Base-Rate Neglect

• base-rate neglect: a disregard of fundamental distribution levels

29: Why the “Balancing Force of the Universe” Is Baloney: Gambler’s Fallacy

• people believe in the “balancing force of the universe.” This is the gambler’s fallacy
• Purely independent events really only exist at the casino, in the lottery, and in theory. In real life, in the financial markets and in business, with the weather and your health, events are often interrelated. What has already happened has an influence on what will happen. As comforting an idea as it is, there is simply no balancing force out there for independent events. “What goes around, comes around” simply does not exist.

30: Why the Wheel of Fortune Makes Our Heads Spin: The Anchor

• The more uncertain the value of something—such as real estate, company stock, or art—the more susceptible even experts are to anchors.

31: How to Relieve People of Their Millions: Induction

• inductive thinking, the inclination to draw universal certainties from individual observations.

32: Why Evil Is More Striking Than Good: Loss Aversion

• The fear of losing something motivates people more than the prospect of gaining something of equal value.
• We are more sensitive to negative than to positive things.
• We remember bad behavior longer than good—except, of course, when it comes to ourselves.

33: Why Teams Are Lazy: Social Loafing

• social loafing effect. It occurs when individual performance is not directly visible; it blends into the group effort.
• Why invest all of your energy when half will do—especially when this little shortcut goes unnoticed? Quite simply, social loafing is a form of cheating of which we are all guilty even if it takes place unconsciously,
• People behave differently in groups than when alone (otherwise there would be no groups). The disadvantages of groups can be mitigated by making individual performances as visible as possible.

34: Stumped by a Sheet of Paper: Exponential Growth

• Nothing that grows exponentially grows forever. Most politicians, economists, and journalists forget that.
• When it comes to growth rates, do not trust your intuition. You don’t have any. Accept it. What really helps is a calculator or, with low growth rates, the magic number of 70.

35: Curb Your Enthusiasm: Winner’s Curse

• The winner’s curse suggests that the winner of an auction often turns out to be the loser. Industry analysts have noted that companies that regularly emerged as winning bidders from these oil field auctions systematically paid too much and years later went under.

36: Never Ask a Writer If the Novel Is Autobiographical: Fundamental Attribution Error

• fundamental attribution error. This describes the tendency to overestimate individuals’ influence and underestimate external, situational factors

37: Why You Shouldn’t Believe in the Stork: False Causality

• Correlation is not causality. Take a closer look at linked events: Sometimes what is presented as the cause turns out to be the effect, and vice versa. And sometimes there is no link at all

38: Why Attractive People Climb the Career Ladder More Quickly: Halo Effect

• The halo effect occurs when a single aspect dazzles us and affects how we see the full picture.
• The halo effect obstructs our view of true characteristics. To counteract this, go beyond face value.

39: Congratulations! You’ve Won Russian Roulette: Alternative Paths

• Alternative paths are all the outcomes that could have happened but did not.
• Alternative paths are invisible, so we contemplate them very rarely. Those who speculate on junk bonds, options, and credit default swaps, thus making millions, should never forget that they flirt with many alternative paths that lead straight to ruin.
• Risk is not directly visible. Therefore, always consider what the alternatives paths are. Success that comes about through risky dealings is, to a rational mind, of less worth than success achieved the “boring” way

40: False Prophets: Forecast Illusion

• what is predictable and what is not? Some things are fairly simple. For example, I have a rough idea of how many pounds I will weigh in a year’s time. However, the more complex a system, and the longer the time frame, the more blurred the view of the future will be. Global warming, oil prices, or exchange rates are almost impossible to foresee. Inventions are not at all predictable because if we knew what technology we would invent in the future, we would already have invented it.

41: The Deception of Specific Cases: Conjunction Fallacy

• conjunction fallacy
• Kahneman believes that two types of thinking exist: The first kind is intuitive, automatic, and direct. The second is conscious, rational, slow, laborious, and logical. Unfortunately, intuitive thinking draws conclusions long before the conscious mind does.
• If an additional condition has to be met, no matter how plausible it sounds, it will become less, not more, likely.

42: It’s Not What You Say, but How You Say It: Framing

• If a message is communicated in different ways, it will also be received in different ways. In psychologists’ jargon, this technique is called framing.
• “Glossing” is a popular type of framing. Under its rules, a tumbling share price becomes a “correction.” An overpaid acquisition price is branded “goodwill.”
• Realize that whatever you communicate contains some element of framing, and that every fact—even if you hear it from a trusted friend or read it in a reputable newspaper—is subject to this effect, too.

43: Why Watching and Waiting Is Torture: Action Bias

• action bias: Look active, even if it achieves nothing
• Society at large still prefers rash action to a sensible wait-and-see strategy.

44: Why You Are Either the Solution—or the Problem: Omission Bias

• omission bias. It crops up where both action and inaction lead to cruel consequences. In such cases, we tend to prefer inaction; its results seem more anodyne
• The action bias causes us to offset a lack of clarity with futile hyperactivity and comes into play when a situation is fuzzy, muddy, or contradictory. The omission bias, on the other hand, usually abounds where the situation is intelligible: A future misfortune might be averted with direct action, but this insight doesn’t motivate us as much as it should.

45: Don’t Blame Me: Self-Serving Bias

• We attribute success to ourselves and failures to external factors. This is the self-serving bias.
• how can we dodge the self-serving bias? Do you have friends who tell you the truth—no holds barred? If so, consider yourself lucky. If not, do you have at least one enemy? Good. Invite him or her over for coffee and ask for an honest opinion about your strengths and weaknesses.

46: Be Careful What You Wish For: Hedonic Treadmill

• the hedonic treadmill: We work hard, advance, and are able to afford more and nicer things, and yet this doesn’t make us any happier.
• (a) Avoid negative things that you cannot grow accustomed to, such as commuting, noise, or chronic stress. (b) Expect only short-term happiness from material things, such as cars, houses, lottery winnings, bonuses, and prizes. (c) Aim for as much free time and autonomy as possible since long-lasting positive effects generally come from what you actively do. Follow your passions even if you must forfeit a portion of your income for them. Invest in friendships. For most people, professional status achieves long-lasting happiness, as long as they don’t change peer groups at the same time. In other words, if you ascend to a CEO role and fraternize only with other executives, the effect fizzles out.

48: Why Experience Can Damage Your Judgment: Association Bias

• false connections are the work of the association bias, which also influences the quality of our decisions. For example: We often condemn bearers of bad news, since we automatically associate them with the message’s content (otherwise known as “shoot-the-messenger syndrome
• “We should be careful to get out of an experience only the wisdom that is in it—and stop there;

49: Be Wary When Things Get Off to a Great Start: Beginner’s Luck

• creating a (false) link with the past. Casino players know this well; they call it beginner’s luck.
• Watch and wait before you draw any conclusions. Beginner’s luck can be devastating, so guard against misconceptions by treating your theories as a scientist would: Try to disprove them.

50: Sweet Little Lies: Cognitive Dissonance

• “These aren’t even ripe yet. Why would I want sour grapes?”
• He can resolve this conflict in one of three ways: (a) by somehow getting at the grapes, (b) by admitting that his skills are insufficient, or (c) by reinterpreting what happened retrospectively. The last option is an example of cognitive dissonance, or, rather, its resolution.

51: Live Each Day as If It Were Your Last—but Only on Sundays: Hyperbolic Discounting

• hyperbolic discounting. Put plainly: The closer a reward is, the higher our “emotional interest rate” rises and the more we are willing to give up in exchange for it
• The more power we gain over our impulses, the better we can avoid this trap.

52: Any Lame Excuse: “Because” Justification

• When you justify your behavior, you encounter more tolerance and helpfulness. It seems to matter very little if your excuse is good or not. Using the simple validation “because” is sufficient.

53: Decide Better—Decide Less: Decision Fatigue

• Making decisions is exhausting. Anyone who has ever configured a laptop online or researched a long trip—flight, hotels, activities, restaurants, weather—knows this well: After all the comparing, considering, and choosing, you are exhausted. Science calls this decision fatigue.
• Willpower is like a battery. After a while it runs out and needs to be recharged. How do you do this? By taking a break, relaxing, and eating something.

54: Would You Wear Hitler’s Sweater?: Contagion Bias

• The contagion bias describes how we are incapable of ignoring the connection we feel to certain items—be they from long ago or only indirectly related

55: Why There Is No Such Thing as an Average War: The Problem with Averages

• power law. A few extremes dominate the distribution, and the concept of average is rendered worthless.
• If someone uses the word “average,” think twice. Try to work out the underlying distribution. If a single anomaly has almost no influence on the set, the concept is still worthwhile. However, when extreme cases dominate (such as the Bill Gates phenomenon), we should discount the term “average.”

56: How Bonuses Destroy Motivation: Motivation Crowding

• Small—surprisingly small—monetary incentives crowd out other types of incentives.
• motivation crowding. When people do something for well-meaning, nonmonetary reasons—out of the goodness of their hearts, so to speak—payments throw a wrench into the works. Financial reward erodes any other motivations.
• Financial incentives and performance bonuses work well in industries with generally uninspiring jobs—industries where employees aren’t proud of the products or the companies and do the work simply because they get a paycheck. On the other hand, if you create a start-up, you would be wise to enlist employee enthusiasm to promote the company’s endeavor rather than try to entice employees with juicy bonuses, which you couldn’t pay anyway.
• If you want your kids to do their homework, practice musical instruments, or even mow the lawn once in a while, do not reach for your wallet. Instead, give them a fixed amount of pocket money each week. Otherwise, they will exploit the system and soon refuse to go to bed without recompense.

57: If You Have Nothing to Say, Say Nothing: Twaddle Tendency

• twaddle tendency - Jabber disguises ignorance
• Clear thoughts become clear statements, whereas ambiguous ideas transform into vacant ramblings. The trouble is that, in many cases, we lack very lucid thoughts.
• Mark Twain: “If you have nothing to say, say nothing.” Simplicity is the zenith of a long, arduous journey, not the starting point

58: How to Increase the Average IQ of Two States: Will Rogers Phenomenon

• stage migration - switcheroo strategies don’t change anything overall, but they create an impressive illusion

59: If You Have an Enemy, Give Him Information: Information Bias

• Forget trying to amass all the data. Do your best to get by with the bare facts. It will help you make better decisions. Superfluous knowledge is worthless, whether you know it or not.

60: Hurts So Good: Effort Justification

• effort justification. When you put a lot of energy into a task, you tend to overvalue the result
• Effort justification is a special case of “cognitive dissonance.”
• Whenever you have invested a lot of time and effort into something, stand back and examine the result—only the result.

61: Why Small Things Loom Large: The Law of Small Numbers

• law of small numbers

62: Handle with Care: Expectations

• When expectations are fueled in the run-up to an announcement, any disparity gives rise to draconian punishment, regardless of how paltry the gap is.
• As paradoxical as it sounds: The best way to shield yourself from nasty surprises is to anticipate them.

63: Speed Traps Ahead!: Simple Logic

• Thinking is more exhausting than sensing: Rational consideration requires more willpower than simply giving in to intuition. In other words, intuitive people tend to scrutinize less.

64: How to Expose a Charlatan: Forer Effect

• The Forer effect explains why the pseudosciences work so well—astrology, astrotherapy, the study of handwriting, biorhythm analysis, palmistry, tarot card readings, and séances with the dead.
• First, the majority of statements in Forer’s passage are so general that they relate to everyone: “Sometimes you seriously doubt your actions.”

65: Volunteer Work Is for the Birds: Volunteer’s Folly

• at all or is it merely a balm to our egos? Although a desire to help the community motivates many volunteers, personal benefits play a big part, such as gaining skills, experience, and contacts. Suddenly we’re not acting quite so selflessly. Indeed, many volunteers engage in what might be deemed “personal happiness management

66: Why You Are a Slave to Your Emotions: Affect Heuristic

• we are puppets of our emotions. We make complex decisions by consulting our feelings, not our thoughts. Against our best intentions, we substitute the question, “What do I think about this?” with “How do I feel about this?” So, smile! Your future depends on it.

67: Be Your Own Heretic: Introspection Illusion

• The belief that reflection leads to truth or accuracy is called the introspection illusion.
• Nothing is more convincing than your own beliefs. We believe that introspection unearths genuine self-knowledge. Unfortunately, introspection is, in large part, fabrication posing two dangers: First, the introspection illusion creates inaccurate predictions of future mental states. Trust your internal observations too much and too long, and you might be in for a very rude awakening. Second, we believe that our introspections are more reliable than those of others, which creates an illusion of superiority. Remedy: Be all the more critical with yourself. Regard your internal observations with the same skepticism as claims from some random person. Become your own toughest critic.

68: Why You Should Set Fire to Your Ships: Inability to Close Doors

• We mere mortals do everything we can to keep open the maximum number of options.
• Write down what not to pursue in your life. In other words, make calculated decisions to disregard certain possibilities and when an option shows up, test it against your not-to-pursue list. It will not only keep you from trouble but also save you lots of thinking time.

69: Disregard the Brand New: Neomania

• When contemplating the future, we place far too much emphasis on flavor-of-the-month inventions and the latest “killer apps” while underestimating the role of traditional technology.
• neomania pitfall: the mania for all things shiny and new

70: Why Propaganda Works: Sleeper Effect

• any knowledge that stems from an untrustworthy source gains credibility over time. The discrediting force melts away faster than the message does.
• you won’t remember if you picked up certain information from a well-researched article or from a tacky advertorial. How can you thwart the sleeper effect? First, don’t accept any unsolicited advice, even if it seems well meant. Doing so, you protect yourself to a certain degree from manipulation. Second, avoid ad-contaminated sources

71: Why It’s Never Just a Two-Horse Race: Alternative Blindness

• alternative blindness: We systematically forget to compare an existing offer with the next-best alternative.

72: Why We Take Aim at Young Guns: Social Comparison Bias

• social comparison bias had kicked in—that is, the tendency to withhold assistance to people who might outdo you, even if you look like a fool in the long run
• Hire people who are better than you, otherwise you soon preside over a pack of underdogs.
• The inept are gifted at overlooking the extent of their incompetence. They suffer from illusory superiority, which leads them to make even more thinking errors, thus creating a vicious cycle that erodes the talent pool over time.

73: Why First Impressions Are Deceiving: Primacy and Recency Effects

• The first traits outshine the rest. This is called the primacy effect.
• The primacy effect is not always the culprit; the contrasting “recency effect” matters as well. The more recent the information, the better we remember it. This occurs because our short-term memory file drawer, as it were, contains very little extra space. When a new piece of information gets filed, an older piece of information is discarded to make room.
• Try to avoid evaluations based on first impressions. They will deceive you, guaranteed, in one way or another. Try to assess all aspects impartially.
• example, in interviews, I jot down a score every five minutes and calculate the average afterward

74: Why You Can’t Beat Homemade: Not-Invented-Here Syndrome

• We are drunk on our own ideas. To sober up, take a step back every now and then and examine their quality in hindsight. Which of your ideas from the past ten years were truly outstanding?

75: How to Profit from the Implausible: The Black Swan

• There are things we know (“known facts”), there are things we do not know (“known unknowns”), and there are things we do not know that we do not know (“unknown unknowns”).
• “known unknowns.” With enough effort, we can hope to answer these one day. Unlike the “unknown unknowns.” No one foresaw Facebook mania ten years ago. It is a Black Swan.
• Black Swans often destroy our best-laid plans. Feedback loops and nonlinear influences interact and cause unexpected results.
• Today is different. With one breakthrough, you can increase your income by a factor of ten thousand.
• So, what can be done? Put yourself in situations where you can catch a ride on a positive Black Swan (as unlikely as that is). Become an artist, inventor, or entrepreneur with a scalable product
• But even if you feel compelled to continue as such, avoid surroundings where negative Black Swans thrive. This means: Stay out of debt, invest your savings as conservatively as possible, and get used to a modest standard of living—no matter whether your big breakthrough comes or not.

76: Knowledge Is Nontransferable: Domain Dependence

• Harry Markowitz received the Nobel Prize in Economics for his theory of “portfolio selection.”
• When it came to Markowitz’s own portfolio—how he should allot his savings into stocks and bonds—he simply opted for fifty-fifty distribution: half in shares, the other half in bonds. The Nobel Prize winner was incapable of applying his ingenious process to his own affairs. A blatant case of domain dependence: He failed to transfer knowledge from the academic world to the private sphere.
• What you master in one area is difficult to transfer to another. Especially daunting is the transfer from academia to real life—
• Book smarts don’t transfer to street smarts easily.

77: The Myth of Like-Mindedness: False-Consensus Effect

• We frequently overestimate unanimity with others, believing that everyone else thinks and feels exactly like we do. This fallacy is called the false-consensus effect.
• Social proof is an evolutionary survival strategy. Following the crowd has saved our butts more often in the past hundred thousand years than striking out on our own. With the false-consensus effect, no outside influences are involved. Despite this, it still has a social function, which is why evolution didn’t eliminate it. Our brain is not built to recognize the truth; instead, its goal is to leave behind as many offspring as possible. Whoever seemed courageous and convincing (thanks to the false-consensus effect) created a positive impression, attracted a disproportionate amount of resources, and thus increased their chances of passing on their genes to future generations. Doubters were less sexy.
• Assume that your worldview is not borne by the public. More than that: Do not assume that those who think differently are idiots. Before you distrust them, question your own assumptions.

78: You Were Right All Along: Falsification of History

• By subconsciously adjusting past views to fit present ones, we avoid any embarrassing proof of our fallibility. It’s a clever coping strategy because no matter how tough we are, admitting mistakes is an emotionally difficult task. But this is preposterous. Shouldn’t we let out a whoop of joy every time we realize we are wrong? After all, such admissions would ensure we will never make the same mistake twice and have essentially taken a step forward. But we do not see it that way.
• is safe to assume that half of what you remember is wrong. Our memories are riddled with inaccuracies, including the seemingly flawless flashbulb memories. Our faith in them can be harmless—or lethal

79: Why You Identify with Your Football Team: In-Group Out-Group Bias

• Prejudice and aversion are biological responses to anything foreign. Identifying with a group has been a survival strategy for hundreds of thousands of years. Not any longer. Identifying with a group distorts your view of the facts.

80: The Difference between Risk and Uncertainty: Ambiguity Aversion

• The terms “risk” and “uncertainty” are as frequently mixed up
• You can make calculations with risk, but not with uncertainty. The three-hundred-year-old science of risk is called statistics. A host of professors deal with it, but not a single textbook exists on the subject of uncertainty. Because of this, we try to squeeze ambiguity into risk categories,
• Your amygdala plays a crucial role. This is a nut-sized area in the middle of the brain responsible for processing memory and emotions. Depending on how it is built, you will tolerate uncertainty with greater ease or difficulty.
• whoever hopes to think clearly must understand the difference between risk and uncertainty. Only in very few areas can we count on clear probabilities: casinos, coin tosses, and probability textbooks. Often we are left with troublesome ambiguity. Learn to take it in stride.

81: Why You Go with the Status Quo: Default Effect

• People crave what they know. Given the choice of trying something new or sticking to the tried-and-tested option, we tend to be highly conservative, even if a change would be beneficial.

82: Why “Last Chances” Make Us Panic: Fear of Regret

• It seems that whoever does not follow the crowd experiences more regret.
• The fear of regret can make us behave irrationally. To dodge the terrible feeling in the pits of our stomachs, we tend to act conservatively, so as not to deviate from the crowd too much.
• The fear of regret becomes really irksome when combined with a “last chance” offer.
• “Last chances” make us panic-stricken, and the fear of regret can overwhelm even the most hardheaded deal makers.

83: How Eye-Catching Details Render Us Blind: Salience Effect

• salience effect. Salience refers to a prominent feature, a stand-out attribute, a particularity, something that catches your eye. The salience effect ensures that outstanding features receive much more attention than they deserve
• We always recall the undesirable exceptions—they are particularly salient.
• Your first instinct is to attribute the success of the book to the memorable cover. Don’t. Gather enough mental energy to fight against seemingly obvious explanations.

84: Why Money Is Not Naked: House-Money Effect

• Money is money, after all. But we don’t see it that way. Depending on how we get it, we treat it differently. Money is not naked; it is wrapped in an emotional shroud.

85: Why New Year’s Resolutions Don’t Work: Procrastination

• Procrastination is the tendency to delay unpleasant but important acts:
• Procrastination is idiotic because no project completes itself.
• Because of the time lapse between sowing and reaping. To bridge it requires a high degree of mental energy,
• self-control had drained their mental energy—or willpower—which they now needed to solve the problem. Willpower is like a battery, at least in the short term. If it is depleted, future challenges will falter.
• Self-control is not available around the clock. It needs time to refuel. The good news: To achieve this, all you need to do is refill your blood sugar and kick back and relax.

86: Build Your Own Castle: Envy

• envy is the most idiotic. Why? Because it is relatively easy to switch off.
• “Envy is the most stupid of vices, for there is no single advantage to be gained from it,”
• How do you curb envy? First, stop comparing yourself to others. Second, find your “circle of competence” and fill it on your own.
• “It’s okay to be envious—but only of the person you aspire to become.”

87: Why You Prefer Novels to Statistics: Personification

• Be careful when you encounter human stories. Ask for the facts and the statistical distribution behind them. You can still be moved by the story, but this way, you can put it into the right context.

88: You Have No Idea What You Are Overlooking: Illusion of Attention

• illusion of attention: We are confident that we notice everything that takes place in front of us. But in reality, we often see only what we are focusing on
• It’s not the case that we miss every extraordinary event. The crux of the matter is that whatever we fail to notice remains unheeded. Therefore, we have no idea what we are overlooking. This is exactly why we still cling to the dangerous illusion that we perceive everything of importance.

89: Hot Air: Strategic Misrepresentation

• strategic misrepresentation: the more at stake, the more exaggerated your assertions become
• Most vulnerable to strategic misrepresentation are mega-projects, where (a) accountability is diffuse (for example, if the administration that commissioned the project is no longer in power), (b) many businesses are involved, leading to mutual finger-pointing, or (c) the end date is a few years down the road.

90: Where’s the Off Switch?: Overthinking

• When do you listen to your head and when do you heed your gut? A rule of thumb might be: If it is something to do with practiced activities, such as motor skills (think of the centipede, Van de Velde, or mastering a musical instrument) or questions you’ve answered a thousand times (think of Warren Buffett’s “circle of competence”),
• Evolution has not equipped us for such considerations, so logic trumps intuition.

91: Why You Take On Too Much: Planning Fallacy

• why are we not natural-born planners? The first reason: wishful thinking. We want to be successful and achieve everything we take on. Second, we focus too much on the project and overlook outside influences. Unexpected events too often defeat our plans

92: Those Wielding Hammers See Only Nails: Déformation Professionnelle

• “man with the hammer tendency” after Twain: “But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you’ve got to have multiple models. And the models have to come from multiple disciplines—because all the wisdom of the world is not to be found in one little academic department.”
• Locate your shortcomings and find suitable knowledge and methodologies to balance them. It takes about a year to internalize the most important ideas of a new field, and it’s worth it: Your pocketknife will be bigger and more versatile, and your thoughts sharper.

93: Mission Accomplished: Zeigarnik Effect

• tasks and how you will tackle them. This will silence the cacophony of inner voices

94: The Boat Matters More Than the Rowing: Illusion of Skill

• good managerial record . . . is far more a function of what business boat you get into than it is of how effectively you row.”
• chance is the deciding factor in a number of fields, such as in financial markets. Here, the illusion of skill pervades.

95: Why Checklists Deceive You: Feature-Positive Effect

• Absence is much harder to detect than presence. In other words, we place greater emphasis on what is present than on what is absent.
• If we thought more frequently about absence, we might well be happier.

96: Drawing the Bull’s-Eye around the Arrow: Cherry Picking

• cherry picking: selecting and showcasing the most attractive features and hiding the rest
• The more elevated or elite a field is, the more we fall for cherry picking.
• ask about the “leftover cherries,” the failed projects and missed goals. You learn a lot more from this than from the successes.

97: The Stone Age Hunt for Scapegoats: Fallacy of the Single Cause

• “When an apple ripens and falls—what makes it fall? Is it that it is attracted to the ground, is it that the stem withers, is it that the sun has dried it up, that is has grown heavier, that the wind shakes it, that the boy standing underneath it wants to eat it? No one thing is the cause.” In this passage from War and Peace, Tolstoy hit the nail on the head.

98: Why Speed Demons Appear to Be Safer Drivers: Intention-to-Treat Error

• intention-to-treat error

99: Why You Shouldn’t Read the News: News Illusion

• two centuries ago, we invented a toxic form of knowledge called “news.” News is to the mind what sugar is to the body: appetizing, easy to digest—and highly destructive in the long run.
• First, our brains react disproportionately to different types of information. Scandalous, shocking, people-based, loud, fast-changing details all stimulate us, whereas abstract, complex, and unprocessed information sedates us.
• read long background articles and books. Yes, nothing beats books for understanding the world.

Epilogue

via negativa. Literally, the negative path, the path of renunciation, of exclusion, of reduction

• We don’t know for sure what makes us successful. We can’t pinpoint exactly what makes us happy. But we know with certainty what destroys success or happiness.
• Eliminate all errors and better thinking will follow.
• Eliminate the downside, the thinking errors, and the upside will take care of itself.
• Thinking more clearly and acting more shrewdly
• To believe that we can completely control our emotions through thinking is illusory—as illusory as trying to make your hair grow by willing it to.
• In the past ten thousand years, we have created a world that we no longer understand. Everything is more sophisticated, but also more complex and interdependent. The result is overwhelming material prosperity, but also lifestyle diseases (such as type 2 diabetes, lung cancer, and depression) and errors in thinking. If the complexity continues to rise—and it will, that much is certain—these errors will only increase and intensify.
• Today’s world rewards single-minded contemplation and independent action. Anyone who has fallen victim to stock market hype has witnessed that.
• we often decide intuitively and justify our choices later. Many decisions (career, life partner, investments) take place subconsciously. A fraction of a second later, we construct a reason so that we feel we made a conscious choice.

Choice between two types of thinking

• Intuitive mind is swift, spontaneous, and energy-saving. situations where the consequences are small (i.e., regular or Diet Pepsi, sparkling or flat water, exception is use Intuition in own circle of competence), I forget about rational optimization and let my intuition take over. Thinking is tiring. Therefore, if the potential harm is small, don’t rack your brains
• Rational thinking is slow, demanding, and energy-guzzling, in situations where the possible consequences are large (i.e., important personal or business decisions)