Gary Klein’s excellent book, “Seeing What Others Don’t: The Remarkable Ways We Gain Insights” starts with a neat looking equation:

Seeing What Others Don't klein vs kahneman

In other words, if you have to get better at anything, you must do two things:

1. Don’t screw up; and

2. Get cool ideas that work.

In BFBV, hopefully you’ll learn both these skills.

But before we get to all of that, I want to tell you about two psychologists — Gary Klein and Daniel Kahneman who, according to Kahneman are “adversarial collaborators.”

Klein vs Kahneman

In his masterpiece, “Thinking, Fast and Slow,” Daniel Kahneman refers to Klein as an “adversarial collaborator, the intellectual leader of an association of scholars and practitioners who do not like the kind of work I do. They … adamantly reject the focus on biases in the heuristics and biases approach. They criticize this model as overly concerned with failures and driven by artificial experiments rather than by the study of real people doing things that matter. They are deeply skeptical about the value of using rigid algorithms to replace human judgment, and …Gary Klein has eloquently articulated this position over many years. This is hardly the basis for a beautiful friendship…

Klein, on the other hand, has this to say about Kahneman:

“In his recent bestseller Thinking, Fast and Slow, Kahneman distinguishes between fast and intuitive System 1 thinking and System 2 thinking, which is slower, more critical, analytical, and deliberate…These ideas line up nicely with the two arrows in the performance diagram I presented. System 2 is all about the downward arrow. It is all about reducing errors. The weight of the heuristics-and-biases studies, reporting bias after bias, can unsettle us, making us doubt our own judgments, our capacity for clear thinking. Frequently, the message of the heuristics-and-biases research is that we are likely to draw mistaken conclusions unless we engage in rigorous critical thinking. The message is that we have to strengthen the down arrow. I believe it is important to counterbalance this negative impression of System 1 with a sense of awe and appreciation about the insights we create and the discoveries we make. We need both arrows, just as we need both System 1 thinking and System 2 thinking. The process of gaining insights, the upward arrow, balances the worries about decision biases, the downward arrow.”

“The judgment and decision making community for the past few decades has concentrated on heuristics and biases, particularly the ways our heuristics can get us in trouble. Thus, the force of seeing connections, coincidences, and curiosities can take us too far, to the point where we see connections that aren’t there. Scientists refer to these false connections as “pseudo-correlations,” connections that aren’t valid, and warn us about them. However, these warnings miss all that we learn by noticing connections. The warning is an example of downarrow thinking, just worrying about the cost of a mental habit without appreciating its benefits. The heuristics and-biases community has provided us with a stream of studies showing how our mental habits can be used against us and make us look stupid and irrational. They don’t offer a balanced set of studies of how these habits enable us to make discoveries.”

You know what? We’ll let them fight over this.

In the meantime, we will learn not to screw up by identifying, with Kahneman’s help, various ways in which people screw up (biases) and then finding antidotes to protect us from those biases.

Loss Aversion

Here’s an example of a bias we will study about in more detail in a a few days from now.

Choose between:

A. An 85% chance of winning $100 (the gamble); or

B. A sure gain of $85 (the sure thing)

Most people when given these choices, pick B because they think of themselves as conservative and after all a bird in hand is worth two in the bush, right? So why gamble? But, now see what happens when the same people are asked to choose between:

A. An 85% chance of losing $100 (the gamble); or

B. A sure loss of $85 (the sure thing)

Almost everyone now switches from the sure thing to the gamble because they hate taking losses. Notice what just happened here. Just by changing a few words, you can turn people from conservative to gamblers.

It turns out, as Kahneman and Tversky pointed out, that the quantity of a man’s pleasure from a $100 gain does not exactly match the quantity of the misery from a $100 loss as the chart below shows.

Loss Aversion klein vs kahneman

See full Klein vs Kahneman: Seeing What Others Don’t in PDF format here.