Great reads: Thinking, Fast and Slow

“The tendency to see patterns in randomness is overwhelming…”

Daniel Kahneman’s Thinking, Fast and Slow made many “best of 2011” lists this year, and deservedly so. Plenty of books on the system­atic faults of the human mind have made the rounds, from Ariely’sPredictably Irrational and its followup to Nassim Taleb’s Fooled by Randomness and The Black Swan.

Fooled by Randomness was a great book marred by the pompous­ness of its author. In fewer words (and with much less ego), Kahneman covers similar terri­tory in more depth and backed by better research:

How many good years should you wait before concluding that an invest­ment adviser is unusu­ally skilled? How many successful acqui­si­tions should be needed for a board of direc­tors to belive that the CEO has extra­or­di­nary flair for such deals? The simple answer to these questions is that if you follow your intuition, you will more often than not err by misclas­si­fying a random event as system­atic. We are far too willing to reject the belief that much of what we see in life is random.

I will do my best to remember the above quote whenever I jump to conclu­sions about a startup, an entre­pre­neur, even an A/B test.

There’s too much in the book that’s applicable to anyone starting a business, or inter­preting analytics from your website, or trying to make rational decisions. Instead of quoting from every chapter, why not just check it out for yourself? (No affil­iate link, I promise.)