The Undoing Project

  Michael Lewis

January 27th 2020


Before the two power duos, economists always assumed and believed that people were rational and hence made rational decisions. Kahneman and Tversky disproved this with several experiments that are sprinkled throughout the book. I personally loved reading about these experiments which were mostly questionnaires because it allowed me to participate and test myself while reading it. Just like Kahneman and Tversky presented, I made decisions that proved their point at every question.


EXPERIMENT TIME!

Let us run a small experiment similar to what Kahneman and Tversky did in the book.

1.   Please hit the generate button below to generate a random number between 0 - 100

Your number is:


2.   How many times do you think the word "Danny" (Daniela Kahneman) comes up in the whole book (The Undoing Project)?

  
  
  
  
  
  




What is the difference between judgement and decision ?
I honestly did not give much thought to this because I saw them as one. But read the next line to see Amos define the difference and if you don't think that is crazy genius, then either I am stupid or you dont appreciate the fine silver lining that this man sees.

" A person making a judgement was assigning odds. How likely is it that guy will be a good NBA player? Is the shadow on the X-ray cancer? Not every judgement is followed by a decision but every decision implies some judgement. "



How do you define loss?
Time and again you see instances where Tversky and Kahneman ask simple questions and come up with such smart answers you usually don't think about.

" A loss according to the theory, was when a person wound up worse off than his ‘reference point.’ But what was this reference point? The easy answer was: wherever you started from."

It is important to remember this especially in today's world where technology has connected every part of the globe. Instagram is a platform constantly changing people’s reference point. How does it relate to loss? People aren’t satisfied with what they have and usually are always aspiring or looking for things that they see on instagram. It is a cycle that you want to believe it will end but it doesn’t. To me, this inability to appreciate and be thankful for what you have because of instagram is a loss.

Amos Tversky on the left and Daniel Kahneman on the right